Loading...
HomeMy WebLinkAboutCAFR-June-30-2002Ali , OR I° II ISI ��Jae �oeoO��. j(j; p1� wiT 1 1��1 City of Paducah Paducah, Kentucky Comprehensive Annual Financial Report Year Ended June 30, 2002 Issued by the Finance Department CITY OF PADUCAH, KENTUCKY COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2001 TABLE OF CONTENTS Introductory Section: Exhibit No. Paee No. Letter of Transmittal 1- 9 Organizational Chart 10 Principal Officials 11 GFOA Certificate of Achievement 12 Financial Section: Independent Auditor's Report 13-14 General Purpose Financial Statements: Combined Balance Sheet - All Fund Types, Account Groups, and Discretely Presented Component Units 1 15-18 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds 2 19-20 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General, Budgeted Special Revenue, Debt Service, and Capital Projects Funds 3 21-22 Combined Statement of Revenues, Expenses and Changes in Retained Earnings/Fund Balances - All Proprietary Fund Types, Nonexpendable Trust Funds, and Similar Discretely Presented Component Units 4 23-24 Combined Statement of Cash Flows - All Proprietary Fund Types, Nonexpendable Trust Funds, and Similar Discretely Presented Component Units 5 25-26 Pension Trust Funds - Combined Statement of Changes in Plan Net Assets 6 27 Paducah Junior College, Incorporated - Statement of Current Funds Revenue, Expenditures, and Other Changes 7 28 Paducah Junior College, Incorporated - Statement of Changes in Fund Balances 8 29-30 Discretely Presented Component Units - Combining Balance Sheet 9 31-34 Discretely Presented Component Units - Combining Statement of Revenues, Expenditures, and Changes in Fund Equity - Governmental Fund Types - Paducah Mainstreet 10 35 Discretely Presented Component Units - Combining Statement of Revenues, Expenses, and Changes in Retained Earnings - Proprietary Fund Types 11 36 Discretely Presented Component Units - Combining Statement of Cash Flows - Proprietary Fund Types 12 37-38 Notes to Financial Statements 39-60 Pension Trust Funds Schedules 61-62 Exhibit No. Paae No. Combining, Individual Fund and Account Group Statements and Schedules: General Fund: Balance Sheet A-1 63 Statement of Revenues, Expenditures, and Changes in Fund Balance A-2 64 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual A-3 65-69 Special Revenue Funds: Combining Balance Sheet B-1 70 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances B-2 71 Federal, State, and Local Grants - Combining Balance Sheet B-3 72-73 Federal, State, and Local Grants - Combining Statement of Revenues, Expenditures, and Changes in Fund Balances B-4 74-75 Budgeted Special Revenue Funds Totals - Detail Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual B-5 76 Municipal Aid Program Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-6 77 Emergency Communication Service Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-7 78 Court Awards Fund — Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-8 79 Small Grant Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-9 80 CDBG Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-10 81 Hope 3 Implementation Grant Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-11 82 Home Grant Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-12 83 HUD Revolving Grant Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-13 84 Paducah Housing Authority Police Grant Fund - Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-14 85 Debt Service Fund: Balance Sheet C-1 86 Statement of Revenues, Expenditures, and Changes in Fund Balance C-2 87 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual C-3 88 Exhibit No. Page No. Capital Project Funds: Combining Balance Sheet D-1 89 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances D-2 90 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual D-3 91-92 Enterprise Funds: Combining Balance Sheet E-1 93 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings E-2 94 Combining Statement of Cash Flows E-3 95 Solid Waste Fund - Schedule of Operating Revenues and Expenses - Budget and Actual E-4 96 Civic Center Fund - Schedule of Operating Revenues and Expenses - Budget and Actual E-5 97 TISA Fund — Schedule of Operating Revenues and Expenses — Budget and Actual E-6 98 Internal Service Funds: Combining Balance Sheet F-1 99 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings F-2 100 Combining Statement of Cash Flows F-3 101 Fleet Maintenance - Schedule of Operating Revenues and Expenses - Budget and Actual F-4 102 Fleet Lease Trust - Schedule of Operating Revenues and Expenses - Budget and Actual F-5 103 Insurance Fund - Schedule of Operating Revenues and Expenses - Budget and Actual F-6 104 Health Insurance Fund - Schedule of Operating Revenues and Expenses - Budget and Actual F-7 105 Trust and Agency Funds: Combining Balance Sheet G-1 106-107 Pension Trust Funds - Combining Statement of Changes in Plan Net Assets G-2 108 Oak Grove Cemetery Trust - Nonexpendable Trust Fund - Statement of Revenues, Expenses, and Changes in Fund Balances G-3 109 Oak Grove Cemetery Trust - Nonexpendable Trust Fund - Statement of Cash Flows G-4 110 Rinkleff Estate - Expendable Trust Fund - Combining Statement of Revenues, Expenditures, and Changes in Fund Balances G-5 111 Agency Funds - Combining Statement of Changes in Assets and Liabilities G-6 112 General Fixed Asset Account Group: Comparative Schedules of General Fixed Assets by Source H-1 113 Schedule of General Fixed Assets by Function and Activity H-2 114-115 Schedule of Changes in General Fixed Assets by Function and Activity H-3 116 Exhibit No. Paee No. General Long -Term Debt Account Group: Statement of Changes in General Long -Term Debt Account Group I-1 117 Single Audit Section: Schedule of Expenditures of Federal Awards Table No. Paee No. Statistical Section: Awards 138 General Government Expenditures by Function 1 118 General Revenue By Source 2 119 Tax Revenue by Source 3 120 Secured Tax Levies and Collections 4 121 Assessed and Estimated Actual Value of 140-141 Schedule of Findings and Questioned Costs Taxable Property 5 122 Property Tax Rates - Direct and Overlapping Governments 6 123 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita 7 124 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures 8 125 Computation of Legal Debt Margin 9 126 Property Value, Construction, and Bank Deposits 10 127 Schedule of Sewer Revenue Bond Coverage 11 128 Demographic Statistics 12 129 Miscellaneous Statistical Data 13 130-131 Principal Taxpayers 14 132 Computation of Direct and Overlapping Debt 15 133 Police and Firefighter's Retirement Fund - Revenue by Source 16 134 Police and Firefighter's Retirement Fund — Expenses by Type 17 135 Summary of Insurance in Force 18 136 Single Audit Section: Schedule of Expenditures of Federal Awards 137 Notes to the Schedule of Expenditures of Federal Awards 138 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 139 Report on Compliance with Requirements Applicable to each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 140-141 Schedule of Findings and Questioned Costs 142 CITY OF PADUCAH, KENTUCKY INTRODUCTORY SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2002 Honorable Mayor and Commissioners City of Paducah Paducah, Kentucky CITY OF PADUCAH Finance Department P.O. Box 2267 Paducah, KY 42002-2267 270-444-8512 September 12, 2002 We are pleased to submit Paducah's Comprehensive Annual Financial Report for the year ended June 30, 2002. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. The major objective of this report is to describe the City's financial condition and the financial results of its operation in a format designed to be useful to the general public, elected officials, investors and creditors. We believe the data, as presented, is accurate in all material aspects; that it is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups. All disclosures necessary to enable the reader to gain maximum understanding of the City's financial activities have been included. This Comprehensive Annual Financial Report consists of four sections: Introductory Section, which contains the table of contents, a list of principal officials, an organizational chart for Paducah and this transmittal letter from the Finance Director; Financial Section, which includes the general purpose financial statements and provides an overview of Paducah's financial position and operating results, and the opinion of independent certified public accountants regarding our financial statements; Statistical Section, which includes a number of statistical tables that present various financial, economic, social and demographic data about Paducah for the last ten years; Single Audit Section, which includes required data in accordance with the Single Audit Act Amendments of 1996. THE CITY Paducah was established in 1827 by explorer General William Clark and was named after local legendary Chickasaw Indian Chief "Paduke". The City of Paducah is situated on the southern bank of the Ohio River in the north central portion of McCracken County. Paducah is the largest city both in the county and in the Jackson Purchase eight county region. The City has established itself as the cultural, economic, medical and transportation center for not only the Jackson Purchase region but for a large portion of Southern Illinois and portions of Western Tennessee and Southeastern Missouri. Equal Opportunity Employer Industry The Paducah area has moved from the traditional "manufacturing industry" to a "service industry" economy. Multi -state computer services, significant banking corporations, wholesale and retail trade, river -related services, the health care industry and related services are the major employment centers. Traditional manufacturing employment is heavily concentrated in the categories of chemicals, petroleum, coal and rubber, and enriched uranium. Economic Development Activities The Greater Paducah Economic Development Council (GPEDC) coordinates the City's efforts in strengthening and building economic development activities. Representatives of financial institutions, utilities, local government, education and the business community serve as the Board of Directors. In existence since 1987, GPEDC assumes and carries out the responsibility of working with existing industry and business, identifying and recruitment of new companies to the City of Paducah. Additionally, GPEDC is responsible for development of long-term strategy for economic development activities and coordinates local entities in the accomplishment of those strategies. Several years ago, the City of Paducah, the State of Kentucky and several federal agencies, in conjunction with business, developed a 650 -acre Information Age Park. This park is designed to appeal to firms needing advanced telecommunications and computing capabilities. The Info Park's focal point is centered on the Resource Center, which was designed to coordinate resources of government, business and education. +1 In 1997, the City of Paducah jointly with the County of McCracken acquired the "Industrial Park West of Paducah and McCracken County". This park contains 209 acres with immediate access to two major railroad lines, Paducah and Louisville and Paducah and Illinois (formerly Illinois Central). The park is located within the southwest quadrant of the I-24/Cairo Road interchange. Churches And Schools A relatively strong religious base is evident in the community, as demonstrated by the many churches in Paducah. Numerous churches representing many of the major denominations are located within the City. Several area churches offer televised activities as a convenience to those who do not attend church. Elementary and secondary education in Paducah is provided by the Paducah Independent School System, the McCracken County School System, Community Christian Academy, and by the St. Mary's Parochial School System. Higher education is available locally from Paducah Community College, a two-year institution affiliated with the University of Kentucky's community college system. Paducah Community College also serves as a site for the University of Kentucky extended campus graduate programs, in addition to a four-year engineering college in conjunction with the University of Kentucky. Western Kentucky Vocational School and Paducah Area Vocational School offer business and technical skills training. Medical Facilities Paducah serves as the regional medical center for much of the Jackson Purchase Area of Western Kentucky, a large portion of Southern Illinois, and Northwestern Tennessee. Paducah's medical industry has almost every major medical specialty represented in the physician population. The medical industry, represented by Lourdes Hospital and Western Baptist Hospital, provides over 750 beds for medical needs. The two largest hospitals, together, employ approximately 3,100 persons. Recreation And Culture Citizens have available a wide range of recreational and cultural activities which cater to diverse tastes. Area residents may choose from fishing on nearby Kentucky and Barkley Lakes to enjoying the performing arts. City parks provide areas for baseball, softball, golf, football, tennis, soccer and picnicking. The Parks Services Department offers a. substantial number of activities for people of all ages. -2- The Dogwood Festival, held in April, highlights the coming of spring in Paducah. Residents are encouraged to spotlight their trees to illuminate a driving tour to celebrate an abundance of dogwood trees. Paducah is the site of the American Quilter's Society's National Museum. The museum, dedicated in 1991, is the centerpiece for the quilters' annual convention held in April. The convention attracts an estimated 30,000 visitors to Paducah each year. The Paducah Summer Festival, started in 1967, is an annual celebration held during the last week in July. Some of the Festival's activities include riverboat excursions, skydiving, hot air balloon races, a variety of music concerts, and usually concludes with a spectacular riverfront fireworks display. The Festival of Lights, started in 1992, is another annual event. This festival marks the beginning of the winter holiday season with the official lighting of the trees in downtown Paducah. One of the latest additions to Paducah's lineup of annual events is the "Barbecue on the River", started in 1995. It attracts in excess of 20,000 participants to Paducah's riverfront in late September. More recently, the "Festival of Murals" was initiated in 1997 as an October annual event in conjunction with the "Arts In Action" event. These events include live concerts and a "Living History" presentation of Paducah's history as depicted in the murals painted on our floodwall. Paducah has an active symphony and several theater groups. The Paducah Symphony Orchestra stages concerts during the winter season with the Market House Theater presenting several productions during the same time period. The Community Concert Association annually schedules a series of concerts, which brings some of the finest artists to the Paducah stage. In addition, Paducah Community College's "Focus" series sponsors a variety of professional productions. The McCracken County Public Library offers a large selection of literature, special collections and programs. The Paducah Community College Library supplements this community resource. The combined inventories of the two libraries yield nearly 121,000 titles, not counting numerous periodicals and newspapers. THE GOVERNMENT Paducah operates under a City Manager form of government. The Paducah Board of Commissioners is made up of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. The Mayor is elected for a four-year term and Commissioners, for a two-year term. The Mayor and Commissioners have equal voting powers. The Board of Commissioners sets the policies that govern the City. It appoints advisory citizens groups that help in the decision-making process. The City Manager is appointed by the Board and assists it in formulating objectives, policies and programs. The City Manager is responsible for the day-to-day operation of the City's 326 full-time employees as of June 30, 2002. Department managers are responsible for their respective departments and report directly to the City Manager. REPORTING ENTITY AND ITS SERVICES For financial statement purposes, as required by generally accepted accounting principles, the City's Comprehensive Annual Financial Report includes all City of Paducah financial statements (primary government) and its component units. Component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City of Paducah. The following component units have been presented as blended units because the units' governing body is substantially the same as the governing body of the City, or provides services almost entirely to the City of Paducah: the Paducah Public Improvement Corporation, whose sole purpose is to finance long-term debt; and Police and Firefighters' Pension Fund, which was established for the benefit of police and firemen of the City. -3- The following component units have been presented as discrete units to emphasize that they are legally separate from the City. Paducah Water Works, Transit Authority of the City of Paducah, Forest Hills Village, Inc., Paducah Power System, Paducah Junior College, incorporated and Paducah Mainstreet, Inc. were all included in the City's financial statements because of their financial relationship with the City. The City provides a full range of municipal services, including police and fire protection; maintenance of streets and infrastructure; sanitation services; storm sewer services; cultural events and recreation activities. Accountinn Svstem The City's accounting system is organized on the basis of separate funds, each of which is considered to be a separate accounting entity. The financial activities of each fund generate a separate set of self -balancing accounts, which comprise its assets, liabilities, reserves, fund balances, revenues and expenditures. Municipal resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The City's accounting records for the governmental funds and agency funds are maintained on a modified accrual basis, with revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City's proprietary funds and trust funds are maintained on the accrual basis. Internal Control In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal controls. Internal controls were designed for Paducah's accounting system to reasonably safeguard its assets against loss from unauthorized use or disposition, check the accuracy of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. Budeetary Control Paducah's budget process provides for input from department managers, top management, elected officials and the public to determine what programs and services will be provided for during the upcoming year. Budgetary control is maintained at the departmental level by comparing budgeted expenditures with actual expenditures on a periodic and year to date basis. An expenditure, which would result in an overrun of department appropriation, cannot be made until additional funds are appropriated and a budget amendment is approved. Purchase orders which result in an overrun of department appropriations cannot be honored until additional appropriations are made available. Open encumbrances at fiscal year end, if any, are reported as reservations of fund balance and are generally held open for 30 days beyond the end of the fiscal year. Unencumbered funds at year-end roll into the fund balance. GENERAL GOVERNMENT FUNCTIONS Revenue Revenue for General Government functions (General Fund) totaled $24,436,111 in fiscal year 2002, an increase of 3.5% over fiscal year 2001. The amount of revenue from various sources, percent of total, and the increase or decrease from last year in dollars and as a percentage are shown in the following tabulation: -4- Increase (Decrease) FY 2002 Percent From FY 2001 Revenue Sources Amount of Total Dollar Amt Percent Taxes $ 5,006,538 20.50% $ 269,970 5.7% Licenses & Permits 17,299,400 70.79% 594,370 3.6% Charges for Services 657,826 2.69% 79,344 13.7% Grants 665,614 2.72% 58,012 -8.0% Interest 220,188 0.90% 138,799 -38.7% Miscellaneous 586,545 2.40% 79,064 15.6% Total Revenue $24,436,111 100.00% $ 825,937 3.5% The most substantial increase in the revenue categories above in actual dollars is in `Licenses & Permits', which amounted to $594,370. Payroll tax increased $270,096, while insurance premium tax collections increased $203,719 over last year. In fiscal year 1992, $5.9 million was received in payroll tax revenues, while the fiscal year 2002 revenue was $9.9 million, an average growth rate of 5.8 percent a year. Payroll tax revenue only grew 2.8 percent over last year, due in part to the national economic slowdown. Insurance premium tax collections increased 6.0 percent or $203,719 over last year due in part to recovery of one-time delinquent accounts and the rise in insurance premiums. In fiscal year 1992, $2.28 million was received, and in fiscal year 1999, the revenue hit $3.36 million, giving an average compounded growth rate of 5.7 percent a year. While insurance premium tax revenue was $3.36 million in 1999, it subsequently hit a 7 - year low in 2000 at $2.97 million. Since fiscal 2001, the insurance premium tax has maintained a positive growth at a rate greater than inflation. While license revenue dollars grew the most, the `Interest' category decreased most dramatically as a percentage of change, 38.7 percent or $138,799. The interest revenue decrease was caused primarily by the steady decline in interest rates. Expenditures Expenditures for General Fund functions totaled $21,194,348, an increase of 8.0% over fiscal year 2001. Increases and decreases in levels of expenditures by major functions compared to the preceding year are shown in the following tabulation: Increase (Decrease) FY 2002 Percent From FY 2001 Amount of Total Dollar Amt Percent General Government $ 3,446 408 16.3% $ 60,078 1.8% Public Safety 11,076,152 52.3% 546,140 5.2% Public Service 5,453 818 25.7% 581,231 11.9% Recreation 897,060 4.2% 158,659 21.5% Other 320,910 1.5% 1 221,253 222.0% Total Expenditures $21,194,348 100.0% 1 $1,567,361 8.0% Expenditures experienced a net increase of 8.0 percent or $1,567,361 between fiscal year 2001 and fiscal year 2002, as compared to the increase in spending between fiscal year 2000 and fiscal year 2001, of $465,935 or 2.4 percent. The fiscal year 1995 expenditure per capita was $595 and changed to $728 and $806 in fiscal year 2000 and fiscal year 2002, respectively. Per capita expenditures have increased on average 4.5 percent annually since fiscal year 1995. Fiscal year 2002 General Fund combined expenditures and transfers out increased $35 per citizen from the fiscal year 2001 amount of $886. -5- The fiscal year 2002 budget process played a significant role in identifying spending trends, and that process should be carried over into fiscal year 2003. The fiscal year 2002 expenditures more accurately reflect all costs associated with the department which benefits from the expenditure. The single largest net change was in `Public Service' for $581,231. The majority of the change was caused by completion of the reorganization in the Public Works Department in addition to significant facility and building improvements. The Recreation Department's Grounds and Cemetery Division was merged into the Public Works Landscape Maintenance Division in order to consolidate all similar maintenance functions. The next largest expenditure change was for `Public Safety', a $546,140 or 11.9% increase over last year. Public Safety expenditures are made up of Police and Fire Department operational costs. The vast majority of the Public Safety increase was for the Police Department at $412,180 or 7.2% over the previous year. Most of the Police increase can be attributed to having full staff for the first time in many years. The `Other' expenditure category changed the most as a percentage at 222% or $221,253. This increase was caused by the reclassification of `grant match expense' from an `operating transfer out' to an `Other' expenditure. CASK MANAGEMENT Idle cash in the City's various funds, except for pension funds, is invested for terms ranging from overnight to 23 months to maturity depending upon liquidity needs. Independent money managers handle Police and Firefighters' Pension Funds. City deposits/investments are protected by FDIC insurance, Federal Home Loan Bank letters of credit, and pledged U.S Government securities. The amount of interest earned in fiscal year 2002 in the General Fund was $220,188, on rates varying from 3.00% to 6.85%. RISK MANAGEMENT In recent years, attention has been focused on safety in the workplace. Working with the Kentucky League of Cities (KLC) has produced numerous enhancements in worker safety. The City has selected various insurance coverages to mitigate potential risk, with premiums costing more than $799,000 and $765,000 in fiscal year 2002 and fiscal year 2001, respectively, for general liability, public officials liability, auto, law enforcement and workers compensation. CAPITAL IMPROVEMENTS Capital improvements are included in each department budget until improvements are completed. At the end of the fiscal year, completed projects are capitalized in the General Fixed Assets account group. During fiscal year 2002, projects and equipment expenditures totaled nearly $9.9 million. The largest project, in terms of dollars in fiscal year 2002, was the City's contribution towards the construction of the Convention Exposition Center of nearly $6.0 million. In the upcoming years, several street, economic development, quality of life and drainage projects will continue and are estimated to cost several million dollars. Capital improvement projects such as the Four Rivers Center, airport expansion, police and recreational facility improvements, neighborhood revitalization, and street and sidewalk rehabilitation are among the projects to be addressed over the next few years. PENSION FUND MANAGEMENT The City of Paducah employees are covered by one of three retirement systems: (1) Police and Firefighters' Pension Fund (PFPF); (2) County Employees' Retirement System (CERS); and (3) Appointive Employees' Pension Fund (AEPF). The PFPF is a contributory defined benefit plan established by ordinance under State Statutes. Members contribute 8% of their gross earnings. The investments of this fund are managed by a six -member board of trustees, which utilizes BB&T Bank as money managers. Monthly reports are received and monthly meetings are held with the money managers to review investment progress and strategy. In the past year, the PFPF had a net decrease of $963,911 with net assets valued at $10,382,217 on June 30, 2002. There were 8 active members and 103 retirees in this fund as of June 30, 2002. The most recent actuarial report prepared for the PFPF was as of July 1, 2002. U The CERS is a multiple employer cost sharing defined benefit plan administered by Kentucky Retirement System. Effective August 1, 1988, all but 21 active police and firefighters opted to transfer from the present plan to the County Employees Retirement System. Non -hazardous duty employees contribute 5% while hazardous duty employees contributed 7% until August 1, 1998. Hazardous duty employees contribute 8% effective August 1, 1998, due to a change in state pension law. The City contributed 6.41% for non -hazardous and 16.28% for hazardous duty employees in fiscal year 2002. The AEPF is a contributory defined benefit plan created by ordinance under State Statute. While there are no active members in the plan, there are 15 retirees receiving benefits from the fund. Beneficiaries are former non -hazardous duty municipal employees who retired prior to the statewide CERS plan. Funding was formerly provided by a special ad valorem tax, with any shortfall to be covered by a transfer from the City's General Fund. The AEPF had a net decrease of $17,166 in fiscal year 2002, with net assets valued as of June 30, 2002, of $344,273. SPECIAL REVENUE FUNDS Special revenue funds included in this report are the Court Awards Fund, Municipal Aid Program, Emergency Communication Service Fund, and Federal and State Grants. Revenues accounted for in these funds are restricted to specific purposes. PROPRIETARY FUNDS The City maintains eight proprietary funds which are: Wastewater/Stormwater, Solid Waste, Fleet Maintenance, Telecommunication Information System Authority (TISA), Civic Center, Fleet Lease Trust, Insurance and Health Insurance Funds. In fiscal year 1990, the Sanitation Fund and the Wastewater/Stormwater Fund were reclassified from General Government and established as proprietary funds. The City's fleet operation was broken out as a proprietary fund in fiscal year 1992 in order to more accurately reflect the true cost of the City's vehicle and equipment fleet maintenance program. The Civic Center's operation was converted into a proprietary fund in fiscal year 1993. In fiscal year 1999, the City set up two new funds called Fleet Lease Trust and Health Insurance Funds, in order to more accurately monitor the City's fleet lease program and health, dental and flexible benefits programs, respectively. All these changes were made to better account for the cost of operations. The Wastewater/Stormwater Fund will phase out in fiscal year 2003, as accounts are settled with the Paducah - McCracken County Joint Sewer Authority (JSA). This agency has taken over the planning, financing, operation and maintenance of all county and city sewer systems. DEBT SERVICE FUND This fund is used to account for payment of general obligation indebtedness, which includes debt associated with the Paducah Public Improvement Corporation and the Fifth Third Bank lease for fire department equipment. In fiscal year 1992, a $5.0 general obligations bond was added to the City's debt obligations, but was subsequently paid off entirely in 1997. A few of the more significant projects funded by the proceeds of this bond included the Downtown Riverfront Redevelopment Project ($1.5 million), Noble Park Pool and recreation facility building renovation ($1.33 million), Senior Citizen Center renovation ($416,600) and Annex renovation which houses the Emergency 911 Command Center ($214,100). Lease/debt payments were fully funded by the General Fund. In fiscal year 2001, since the Debt Service Fund is funding -dependent upon the General Fund, all excess funds were transferred to the General Fund. This one-time transfer was $591,000. -7- In June 2001, a $9.29 million general obligation bond was added to the City's debt obligation to finance construction of the Four Rivers Center for the Performing Arts ($3.0 million) and the expansion of the Julian Carroll Convention Center ($6.0 million). These bonds are required to be fully paid within 25 years from the date of issue and are backed by the full faith and credit of the City. While the City issues these bonds, 50% of the principal amount of the bonds is being issued on behalf of the County of McCracken, Kentucky. McCracken County has issued the City a general obligation note in a principal amount equal to 50%, of the principal amount of the bonds. The total cash outlay requirements for debt service retirement; principal and interest, in fiscal year 2002 were $775,639. Below is a summary of all general long-term debt of the City of Paducah. Balance Net Balance July 1, 2001 Chane June 30, 2002 General Obligation Bonds: Convention & Arts Center $ 9,290,000 $(215,000) $ 9,075 000 General Fund accrued compensated absences 1,290,795 21,583 1,312,378 Capital lease: Fire Equipment 381,330 147,276 234,054 Totals $10,962,125 $ 340,693 $10,621,432 ECONOMIC CONDITIONS AND OUTLOOK The unemployment rate in McCracken County has been on a steady decline since 1983, when it peaked at 11.5%. The rate reported as of June 2002, was 5.5%. The City has experienced a slow down in economic growth due to the national economic slow down in fiscal year 2002. In spite of the national slowdown, Paducah has continued to experience retail growth in the Kentucky Oaks Mall area and the City's Southside. The downtown area continues to be enhanced with the addition of new retail establishments, further expanding the property tax value base as well as the payroll tax base for the future. Downtown will be further enhanced with the construction of the Four Rivers Performing Center (FRC). The FRC is scheduled to complete construction in 2003 at a cost in excess of $34 million. The State of Kentucky contributed $20 million toward the project, with the balance of the cost funded locally by government, tourism taxes and private donations. Since its inception, the Paducah Enterprise Zone Program has produced 311 qualified businesses, which have pledged expenditures of $76.9 million in addition to creating 285 targeted jobs. INDEPENDENT AUDIT Kentucky Revised Statute 91 A-040 requires an annual audit of each fund of the City by an auditor of public accounts or a certified public accountant. The independent certified public accounting firm of Williams, Williams & Lentz, LLP has conducted this audit and their opinion has been included in this report. The City is subject to the Single Audit Act Amendments of 1996 reporting requirements. The Single Audit Report is included within this report. CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting for fiscal year ended June 30, 2001. This was the eleventh year for Paducah to receive this prestigious award. -8- In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, the City published an easily readable and efficiently organized comprehensive annual financial report, the contents of which conform to program standards. The report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe our current report continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. ACKNOWLEDGMENTS The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. We wish to express our appreciation to all members of the Finance Department who assisted and contributed to its preparation, and special thanks to Williams, Williams & Lentz, LLP. We also thank the Mayor and City Commission for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, onathan W. Perkins, CPA Finance Director/Treasurer Advisory Board and Committees CITY OF PADUCAH, KENTUCKY ORGANIZATIONAL CHART I CITIZENS OF PADUCAH I Mayor and Commissioners City Manager Ic City Attorney Personnel I Engineering Department Police Department Engineering I I Flood Control Division Division Fire Department Planning I I Finance Department Department City Clerk Street Division I I Parks Inspection Department Public Works Department Solid Fleet Waste Maintenance Division Facility Maintenance Division Mayor Mayor Pro tem Commissioner Commissioner Commissioner Personnel Finance Police Chief Fire Chief City Engineer Planning Parks Services Inspections Public Works Information Services ,"i%g City Clerk CITY OF PADUCAH, KENTUCKY PRINCIPAL OFFICIALS BOARD OF COMMISSIONERS CITY MANAGER James Zumwalt see William F. Paxton Gerry Montgomery Robert Coleman Buz Smith PAUlb �i-LA=SS ekt'Brr y Jonathan Perkins, C.P.A. Randy Bratton Redell Benton Richard Murphy Thomas Barnett Mark Thompson Joel Scarbrough Bob Freudenthal Greg Mueller Tammy Brock Certificate of Achievement for Excellence in Financial Reporting Presented to City of Paducah, Kentucky For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2001 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. G F Ofp/e� A, MITER STA T C""�ADi' Pr sident CDRPDAATDI! ZMAL 107-7.Exeutie Director -12- CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 WILLIAMS, WILLIAMS & LENTZ, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON - P.O. BOX 2500 PADUCAH, KENTUCKY 42002-2500 J. RICHARD WALKER ROBERT R. ROBERTSON c�crrndne70 AREA CODE 2 JERRY G. SEVERNS 443,3643 O. SUZETTE CRONCH ANNETTE T. RYAN MICHAEL F. KARNES HO ROGER .HARMASRIS Independent Auditor's Report J. DAVID BAILEY, III G. LEON WILLIAMS H. WILLIAM LENTZ Honorable William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky We have audited the accompanying general purpose financial statements of the City of Paducah, Kentucky as of and for the year ended June 30, 2002, as listed in the table of contents. These general purpose financial statements are the responsibility of the management of the City of Paducah, Kentucky. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We did not audit the financial statements of the following component units: Paducah Water Works, Forest Hills Village, Inc., Paducah Power System, and Transit Authority of the City of Paducah, which represent 78 percent and 100 percent, respectively, of the assets and revenues of the Component Units column. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion on the general purpose financial statements, insofar as it relates to the amounts included for Paducah Water Works, Forest Hills Village, Inc., Paducah Power System, and Transit Authority of the City of Paducah, discretely presented component units, is based on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. The financial statements of Paducah Water Works, Forest Hills Village, Inc., and Paducah Power System were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the reports of other auditors, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Paducah, Kentucky as of June 30, 2002, and the results of its operations and cash flows of its proprietary fund types and nonexpendable trust funds for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated September 12, 2002, on our consideration of the City of Paducah, Kentucky's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. -13- Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Paducah, Kentucky. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a required part of the general purpose financial statements of the City of Paducah, Kentucky. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. The Pension Trust Funds Schedules on pages 61 and 62 are not a required part of the general purpose financial statements, but are supplementary schedules required by the Governmental Accounting Standards Board. We have applied certain limited procedures prescribed by professional standards, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and do not express an opinion on it. September 12, 2002 SEE CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION COMBINED STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 COMBINED STATEMENTS GENERAL PURPOSE FINANCIAL STATEMENTS (Combined Statements - Overview) These general purpose financial statements provide a summary overview of the financial position of all funds and account groups and the operating results of all funds. They also serve as an introduction to the more detailed statements and schedules that follow. Separate columns are used for each fund type and account group. CITY OF PADUCAH, KENTUCKY COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT UNITS JUNE 30, 2002 ASSETS AND OTHER DEBITS Cash and cash equivalents Investments Receivables: Accounts Notes Grants Interest Property taxes (net of allowances for uncollectibles) Due from other funds Due from other taxing agencies Other Prepaid items Inventory Restricted assets Other assets Land Buildings Machinery and equipment Utility plant Less accumulated depreciation Amount available in debt service funds Amounts to be provided for: Retirement of general long-term debt Exhibit 1 Governmental Fund Types Proprietary TOTAL ASSETS AND OTHER DEBITS $9,482,046 $1,875,901 $246,351 $4,683,295 $3,520,240 The notes to the financial statements are an integral part of this statement. -15- Special Debt Capital General Revenue Service Projects Enterprise $2,279,168 $1,233,788 $ 45,684 51,446,742 $1,599,453 2,996,685 508,903 - 3,235,081 407,123 64,531 78,710 - - - - - 200,667 - - 97,255 53,079 - - - 39,001 1,421 - 1,472 2,328 3,746,498 - - - - 258,908 - - - - - - - - 359 - - - - 65,908 - - - - 324,882 - - - - 3,793,415 - - - - (2,673,228) TOTAL ASSETS AND OTHER DEBITS $9,482,046 $1,875,901 $246,351 $4,683,295 $3,520,240 The notes to the financial statements are an integral part of this statement. -15- $2,624,497 $11,256,057 $27,922,802 $10,621,432 $72,232,621 $108,078,623 $180,311,244 (Continued) -16- Fiduciary Totals Totals Fund Types Fund Types Account Groups (Memorandum (Memorandum Trust General General Only) Only) Internal and Fixed Long -Term Primary Component Reporting Service Agency Assets Debt Government Units Entity $ 701,068 $ 936,231 $ - $ - $ 8,242,134 $ 1,935,089 $ 10,177,223 229,781 10,041,456 - - 17,419,029 698,415 18,117,444 139,924 - - - 283,165 2,723,535 3,006,700 - - - - 200,667 - 200,667 - - 150,334 - 150,334 4,275 81,285 - - 129,782 3,344 133,126 - 188,841 - - 3,935,339 579,677 4,515,016 - - - 258,908 - 258,908 - 2,114 - - 2,114 - 2,114 - 6,130 - - 6,130 863,562 869,692 - - 53,063 53,063 125,408 - - - 125,767 1,779,501 1,905,268 - - - - - 12,253,350 12,253,350 - - 1,297,400 1,297,400 5,054,656 - 5,120,564 166,542 5,287,106 20,000 - 13,026,970 - 13,371,852 18,865,462 32,237,314 2,323,175 - 9,841,176 - 15,957,766 3,469,915 19,427,681 - - - 109,334,836 109,334,836 (919,134) - - - (3,592,362) (45,945,068) (49,537,430) - - - 244,724 244,724 - 244,724 - - - 10,376,708 10,376,708 - 10,376,708 $2,624,497 $11,256,057 $27,922,802 $10,621,432 $72,232,621 $108,078,623 $180,311,244 (Continued) -16- CITY OF PADUCAH, KENTUCKY COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT UNITS JUNE 30, 2002 LIABILITIES, FUND EQUITY AND OTHER CREDITS Liabilities: Voucher and accounts payable Accrued payroll and payroll taxes Due to other funds Due to taxing agencies Deferred revenues Deferred compensation benefits payable Accrued compensated absences Other liabilities Accrued interest and matured interest coupons unpaid General obligation bonds payable Obligation under capital lease Revenue bonds payable Public improvement bonds payable Public improvement loan payable Total liabilities Fund Equity and Other Credits: Contributed capital Investment in general fixed assets and plant Retained earnings Fund balances: Reserved for employees' pension benefits Reserved for trust purposes Reserved for program purposes Reserved for capital improvements Reserved for scholarships and other Unreserved: Designated for debt service Designated for street improvement Undesignated Total fund equity and other credits TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS Exhibit 1 (Continued) Governmental Fund Types Proprietary _ - 344 - - 5,040,384 593,833 1,627 471,577 461,368 370,861 2,688,011 567,096 - - - - 4,211,718 - - 244,724 - - - 327,944 - - - 4,441,662 387,028 - - 4,441,662 1,282,068 244,724 4,211,718 3,058,872 $9,482,046 $1,875,901 $246,351 $4,683,295 $3,520,240 The notes to the financial statements are an integral part of this statement. -17- Special Debt Capital General Revenue Service Projects Enterprise $ 501,531 $ 295,795 $ - $ 108,649 $ 385,095 509,080 33,651 - - 16,577 - 70,478 - 4,000 - 3,746,773 193,909 1,283 358,928 - 283,000 - - - 59,696 _ - 344 - - 5,040,384 593,833 1,627 471,577 461,368 370,861 2,688,011 567,096 - - - - 4,211,718 - - 244,724 - - - 327,944 - - - 4,441,662 387,028 - - 4,441,662 1,282,068 244,724 4,211,718 3,058,872 $9,482,046 $1,875,901 $246,351 $4,683,295 $3,520,240 The notes to the financial statements are an integral part of this statement. -17- $2,624,497 $11,256,057 $27,922,802 $10,621,432 $72,232,621 $108,078,623 $180,311,244 -18- Fiduciary Totals Totals Fund Types Fund Types Account Groups (Memorandum (Memorandum Trust General General Only) Only) Internal and Fixed Long -Term Primary Component Reporting Service Agency Assets Debt Government Units Entity $ 300,554 $ 509 $ - $ - $ 1,592,133 $ 3,193,355 $ 4,785,488 5,688 255,382 - - 820,378 393,528 1,213,906 83,712 100,718 - - 258,908 - 258,908 - 90,237 - - 90,237 - 90,237 - - - - 4,300,893 1,862,676 6,163,569 - 50,858 - - - - 1,312,378 1,705,932 149,944 123,594 149,944 1,829,526 - - - - 1,556,928 1,556,928 ' - - 344 225,566 225,910 - - - 9,075,000 9,075,000 - 9,075,000 - - - 234,054 234,054 - 234,054 - - - - 5,965,526 5,965,526 ' - - - 6,025,792 6,025,792 - - - - 385,615 385,615 440,812 446,846 - 10,621,432 18,077,879 19,882,524 37,960,403 260,495 - - - 631,356 12,940,382 13,571,738 - - 27,922,802 - 27,922,802 16,806,902 44,729,704 1,923,190 - - - 4,611,201 52,720,211 57,331,412 - 10,726,490 - - 10,726,490 - 10,726,490 - 69,073 - - 69,073 - 69,073 - - - - 567,096 - 567,096 - - - - 4,211,718 - 4,211,718 - - - - - 2,580,425 2,580,425 - - - - 244,724 - 244,724 - - - 327,944 - 327,944 - 13,648 - - 4,842,338 3,148,179 7,990,517 2,183,685 10,809,211 27,922,802 - 54,154,742 88,196,099 142,350,841 $2,624,497 $11,256,057 $27,922,802 $10,621,432 $72,232,621 $108,078,623 $180,311,244 -18- Exhibit 2 CITY OF PADUCAH, KENTUCKY COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS YEAR ENDED JUNE 30, 2002 Revenues: Taxes Licenses Charges for services Intergovernmental Grants Interest Miscellaneous Total revenues Expenditures: Current: General government Public safety Public service Parks Planning and development Other Capital outlay Debt service: Principal requirement Interest and fiscal requirement Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balances, July 1, 2001, as previously reported Governmental Fund Types 3,446,408 - - - 11,076,152 1,217,329 - - 5,453,818 1,709,969 - 897,060 - - - - 2,231,628 - - 320,910 - - 2,934 - - - 7,579,179 362,275 - - - 413,364 - 21,194,348 5,158,926 775,639 7,582,113 3,241,763 (1,328,019) (243,291) (6,165,632) 3,789 Special Debt Capital General Revenue Service Projects $ 5,006,538 $ - $371,327 $ - 17,299,400 - - - 657,826 794,906 - - - 399,977 161,021 29,374 665,614 2,332,410 - 992,221 220,188 46,090 - 274,999 586,545 257,524 - 119,887 24,436,111 3,830,907 532,348 1,416,481 3,446,408 - - - 11,076,152 1,217,329 - - 5,453,818 1,709,969 - 897,060 - - - - 2,231,628 - - 320,910 - - 2,934 - - - 7,579,179 362,275 - - - 413,364 - 21,194,348 5,158,926 775,639 7,582,113 3,241,763 (1,328,019) (243,291) (6,165,632) 3,789 836,253 255,375 693,045 (3,033,267) (28,789) - - (3,029,478) 807,464 255,375 693,045 212,285 (520,555) 12,084 (5,472,587) 4,229,377 1,851,640 232,640 9,834,405 Adjustment to beginning fund balances - (49,017) FUND BALANCES, JUNE 30, 2002 $ 4,441,662 $1,282,068 The notes to the financial statements are an integral part of this statement. -19- - (150,100) $244,724 $4,211,718 -20- Totals Totals Fiduciary (Memorandum (Memorandum Fund Type Only) Only) Expendable Primary Component Reporting Trust Government Units Entity $ - $ 5,377,865 $ - $ 5,377,865 - 17,299,400 - 17,299,400 - 1,452,732 - 1,452,732 - 590,372 37,934 628,306 3,990,245 - 3,990,245 306 541,583 381 541,964 - 963,956 53,744 1,017,700 306 30,216,153 92,059 30,308,212 50 3,446,458 - 3,446,458 - 12,293,481 - 12,293,481 - 7,163,787 - 7,163,787 - 897,060 - 897,060 - 2,231,628 92,783 2,324,41.1 - 323,844 - 323,844 - 7,579,179 - 7,579,179 - 362,275 - 362,275 - 413,364 - 413,364 50 34,711,076 92,783 34,803,859 256 (4,494,923) (724) (4,495,647) - 1,788,462 - 1,788,462 - (3,062,056) - (3,062,056) - (1,273,594) - (1,273,594) 256 (5,768,517) (724) (5,769,241) 13,392 16,161,454 - 16,161,454 - (199,117) 3,354 (195,763) $13,648 $10,193,820 $ 2,630 $10,196,450 -20- Exhibit 3 CITY OF PADUCAH, KENTUCKY COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, BUDGETED SPECIAL REVENUE, DEBT SERVICE, AND CAPITAL PROJECTS FUNDS YEAR ENDED JUNE 30, 2002 The notes to the financial statements are an integral part of this statement. -21- General Fund Budgeted Special Variance - Favorable Revenues: Budget Actual (Unfavorable) Budget Actual Taxes $ 4,907,920 $ 5,006,538 $ 98,618 $ - $ - Licenses and permits Charges for services 17,391,150 655,695 17,299,400 657,826 (91,750) 2,131 - 797,950 - 794,906 Intergovernmental - - - 399,975 399,977 Grants 578,435 665,614 87,179 849,960 757,145 Interest 220,190 220,188 (2) 44,525 44,530 Other 596,545 586,545 (10,000) 257,460 257,524 Total revenues 24,349,935 24,436,111 86,176 2,349,870 2,254,082 Expenditures: Current: General government 3,448,280 3,446,408 1,872 646,170 687,106 Public safety 11,077,265 11,076,152 1,113 1,217,375 1,217,329 Public service 5,456,105 5,453,818 2,287 1,710,020 1,709,969 Parks 898,515 897,060 1,455 - - Other 321,030 320,910 120 - - Principal requirement - - - - Interest and fiscal requirement Capital outlay - - - - Total expenditures 21,201,195 21,194,348 6,847 3,573,565 3,614,404 Excess of revenues over (under) expenditures 3,148,740 3,241,763 93,023 (1,223,695) (1,360,322) Other Financing Sources (Uses): Operating transfers in 3,785 3,789 4 931,775 836,253 Operating transfers out (3,265,135) (3,033,267) 231,868 (35,860) (28,789) Total other financing sources (uses) (3,261,350) (3,029,478) 231,872 895,915 807,464 Excess of revenues and other financing sources over (under) expenditures and other uses $ (112,610) 212,285 $ 324,895 $ (327,780) (552,858) Fund balances, July 1, 2001 4,229,377 1,579,802 Adjustment to beginning fund balance - - FUND BALANCES, JUNE 30, 2002 $ 4,441,662 $1,026,944 The notes to the financial statements are an integral part of this statement. -21- Revenue Funds Debt Service Fund Capital Projects Funds Variance- Variance- Variance - Favorable Favorable Favorable (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ - $ 371,325 $ 371,327 $ 2 $ - $ - $ _ (3,044) - - - - - - 2 161,020 161,021 1 29,370 29,374 4 (92,815) - - - 891,535 992,221 100,686 5 - - - 274,990 274,999 9 64 - - - 119,880 119,887 7 (95,788) 532,345 532,348 3 1,315,775 1,416,481 100,706 (40,936) - - - - - - 46 - - - - - - 51 - - - - - - - - - - 2,935 2,934 1 - 362,275 362,275 - - - - - 413,460 413,364 96 - - - - - - - 7,522,380 7,579,179 (56,799) (40,839) 775,735 775,639 96 7,525,315 7,582,113 (56,798) (136,627) (243,390) (243,291) (95,522) 255,375 255,375 7,071 - - (88,451) 255,375 255,375 $(225,078) $ 11,985 12,084 232,640 $ 244,724 (6,209,540) (6,165,632) 43,908 830,620 693,045 (137,575) 830,620 693,045 (137,575) $ 99 $ (5,378,920) -22- (5,472,587) $ (93,667) 9,834,405 (150,100) $ 4,211,718 CITY OF PADUCAH, KENTUCKY COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS/FUND BALANCES - ALL PROPRIETARY FUND TYPES, NONEXPENDABLE TRUST FUNDS, AND SIMILAR DISCRETELY PRESENTED COMPONENT UNITS YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Intergovernmental Other Total operating revenues Operating Expenses: Cost of sales Investment fees and administrative Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating Revenues (Expenses): Grants Investment income Gain (loss) on disposal of property and equipment Interest expense Other Amortization Total nonoperating revenues (expenses) Income (loss) before operating transfers Operating Transfers In (Out): Operating transfers in Net income (loss) Other Changes in Retained Earnings: Depreciation on property and equipment funded by contributed capital Transfer to contributed capital Retained earnings/fund balances, July 1, 2001 Adjustment to beginning fund balance RETAINED EARNINGS/FUND BALANCES, JUNE 30, 2002 Proprietary Fund Types 4,072,575 Internal Enterprise Service $3,333,293 $4,255,496 2,298 - 3,335,591 4,255,496 Exhibit 4 Fiduciary Fund Type Nonexpendable Trust 2,410 2,410 2,963,984 4,072,575 - - - 276 388,161 243,260 - 3,352,145 4,315,835 276 (16,554) (60,339) 2,134 51,404 12,727 2,930 35,753 17,213 - 87,157 29,940 2,930 70,603 (30,399) 5,064 10,000 591,318 - 80,603 560,919 5,064 53,427 - - 2,553,981 1,301,757 64,009 - 60,514 - $2,688,011 $1,923,190 $69,073 The notes to the financial statements are an integral part of this statement. -23- Totals Totals (Memorandum (Memorandum Only) only) Primary Component Reporting Government Units Entity $7,588,789 $46,774,472 $54,363,261 2,410 - 2,410 2,298 - 2,298 7,593,497 46,774,472 54,367,969 7,036,559 43,527,072 50,563,631 276 - 276 631,421 3,484,900 4,116,321 7,668,256 47,011,972 54,680,228 (74,759) (237,500) (312,259) - 2,007,546 2,007,546 67,061 311,382 378,443 52,966 - 52,966 - (652,919) (652,919) - 42,407 42,407 - (84,698) (84,698) 120,027 1,623,718 1,743,745 45,268 1,3 86,218 1,431,486 601,318 - 601,318 646,586 1,386,218 2,032,804 53,427 112,256 165,683 - (1,591,799) (1,591,799) 3,919,747 52,813,536 56,733,283 60,514 - 60,514 $4,680,274 $52,720,211 $57,400,485 -24- Exhibit 5 CITY OF PADUCAH, KENTUCKY COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES, NONEXPENDABLE TRUST FUNDS, AND SIMILAR DISCRETELY PRESENTED COMPONENT UNITS YEAR ENDED JUNE 30, 2002 Reconciliation of Cash and Cash Equivalents to the Balance Sheet: Total cash and cash equivalents per the balance sheet Less: Pension trust, expendable trust and agency fund cash and cash equivalents, statement of cash flows not required Add: Adjustment for restricted and short-term investments Total cash and cash equivalents per statement of cash flows Non -Cash Capital and Related Financing Activities: Net increase in fair value of investments The notes to the financial statements are an integral part of this statement. -25- $1,599,453 $ 701,068 $1,599,453 $ 701,068 Proprietary Fund Types Internal Cash Flows from Operating Activities: Enterprise Service Operating income (loss) (16,554) (60,339) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 388,161 243,260 Provision for losses on accounts receivable - - Debt discount and issue cost - - (Increase) decrease in: Receivables 242,749 39,653 Inventories - 7,870 Other assets - - Increase (decrease)in: Accounts payable and accrued expenses 35,870 67,690 Net cash provided (used) by operating activities 650,226 298,134 Cash Flows from Noncapital Financing Activities: Operating transfers from other funds 10,000 591,318 Operating grants received - - Net cash provided (used) by noncapital financing activities 10,000 591,318 Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets (386,026) (470,781) Interest paid on bonds and public improvement debt - - Interest paid on long-term debt - - Contributed capital - - Proceeds from sale of capital assets 393 17,213 Proceeds from issuance of long-term debt - - Principal paid on bond maturities and public improvement debt - - Principal paid on long-term debt - - Capital grant fimding - Net cash provided (used) by capital and related financing activities (385,633) (453,568) Cash Flows from Investing Activities: Purchase of investment securities 528,237 33,986 Proceeds from sales and maturities of investment securities - - Investment income 51,404 12,727 Net cash provided (used) by investing activities 579,641 46,713 Net increase (decrease) in cash and cash equivalents 854,234 482,597 Cash and cash equivalents, July 1, 2001 745,219 218,471 CASH AND CASH EQUIVALENTS, JUNE 30, 2002 (Includes restricted assets of enterprise fund) $1,599,453 $ 701,068 Reconciliation of Cash and Cash Equivalents to the Balance Sheet: Total cash and cash equivalents per the balance sheet Less: Pension trust, expendable trust and agency fund cash and cash equivalents, statement of cash flows not required Add: Adjustment for restricted and short-term investments Total cash and cash equivalents per statement of cash flows Non -Cash Capital and Related Financing Activities: Net increase in fair value of investments The notes to the financial statements are an integral part of this statement. -25- $1,599,453 $ 701,068 $1,599,453 $ 701,068 (839,201) (2,440,347) (3,279,548) (37,992) Totals (2,134,778) Totals Fiduciary (Memorandum 2,409,689 (Memorandum Fund Type Only) 311,382 Only) Nonezpendable Primary Component Reporting Trust Government Units Entity $ 2,134 (74,759) (237,500) $ (312,259) - 631,421 3,484,900 4,116,321 - - 195,974 195,974 - - (118,625) (118,625) - 282,402 (207,800) 74,602 - 7,870 (595,457) (587,587) - - (45,961) (45,961) - 103,560 196,117 299,677 2,134 950,494 2,671,648 3,622,142 - 601,318 - 601,318 - - 596,849 596,849 - 601,318 596,849 1,198,167 - (856,807) (5,773,104) (6,629,911) - - (301,519) (301,519) - - (354,200) (354,200) - - 156,632 156,632 - 17,606 10,100 27,706 - - 3,539,914 3,539,914 - - (1,222,285) (1,222,285) - - (87,684) (87,684) - - 1,591,799 1,591,799 (839,201) (2,440,347) (3,279,548) (37,992) 524,231 (2,134,778) (1,610,547) 20,457 20,457 2,409,689 2,430,146 3,333 67,464 311,382 378,846 (14,202) 612,152 586,293 1,198,445 (12,068) 1,324,763 1,414,443 2,739,206 13,085 976,775 3,979,337 4,956,112 $ 1,017 $2,301,538 $5,393,780 $7,695,318 $ 936,231 $3,236,752 $1,800,517 $5,037,269 (935,214) (935,214) - (935,214) - - 3,593,263 3,593,263 $ 1,017 $2,301,538 $5,393,780 $7,695,318 $ (488,703) $ (488,703) $ - $ (488,703) -26- Exhibit 6 CITY OF PADUCAH, KENTUCKY PENSION TRUST FUNDS COMBINED STATEMENT OF CHANGES IN PLAN NET ASSETS YEAR ENDED JUNE 30, 2002 Additions: Contributions: Employer Plan member Interfund transfers Total contributions Net investment income Total additions Deductions: Benefits Administrative expense Total deductions Net decrease Net assets held in trust for pension benefits: July 1, 2001 JUNE 30, 2002 $ 209,356 29,224 672,276 910,856 11,862 922,718 1,863,279 40,516 1,903,795 (981,077) 11,707,567 $10,726,490 The notes to the financial statements are an integral part of this statement. -27- Budget Letter Paducah is a Vibrant and Beautiful River City In the heart of the Four Rivers Region. Our region has a Strong Economy. Our City has a National Reputation for the Arts. We are a Hometown for Families and an Inclusive Community Our residents enjoy choices of Livable Neighborhoods With Quality Homes And Fun Things to Do. We take Great Pride in Paducah. Pap This budget document frames 100 "Decision Items" for the Commission to act on. The decisions you make about these 100 Items include major steps toward creating the Paducah of tl year 2020 that you envisioned. A. SUMMARY OF FY 2006 BUDGET RECOMMENDATION I have prepared two recommended budgets, and "Operating Budget" and an "Investment Budget": The Operating Budget is the City's traditional General Fund budget. It is funded by the taxes and fees we have received in the past and pays for the daily services the City provides its Citizens. The recommended operating budget totals $27 million. The recommended budget is now in balance: revenues equal expenditures. It was not in balance when we added all the Department requests. Although the Department Director were very conservative in their requests and we excluded almost all capital items, we hac to cut $2.1 million from the operating budget to bring it into balance. 2. The Investment Budget is funded by increasing the City's Occupational Wage Tax frorr 1 1/2% to 2% and earmarking the revenue from the 1/z% increase. Expenditures in the investment budget are restricted to three purposes: o Economic Development o Neighborhood Re -Development o Capital and Infrastructure Investment Budget Letter Paducah is a Vibrant and Beautiful River City In the heart of the Four Rivers Region. Our region has a Strong Economy. Our City has a National Reputation for the Arts. We are a Hometown for Families and an Inclusive Community Our residents enjoy choices of Livable Neighborhoods With Quality Homes And Fun Things to Do. We take Great Pride in Paducah. Pap This budget document frames 100 "Decision Items" for the Commission to act on. The decisions you make about these 100 Items include major steps toward creating the Paducah of tl year 2020 that you envisioned. A. SUMMARY OF FY 2006 BUDGET RECOMMENDATION I have prepared two recommended budgets, and "Operating Budget" and an "Investment Budget": The Operating Budget is the City's traditional General Fund budget. It is funded by the taxes and fees we have received in the past and pays for the daily services the City provides its Citizens. The recommended operating budget totals $27 million. The recommended budget is now in balance: revenues equal expenditures. It was not in balance when we added all the Department requests. Although the Department Director were very conservative in their requests and we excluded almost all capital items, we hac to cut $2.1 million from the operating budget to bring it into balance. 2. The Investment Budget is funded by increasing the City's Occupational Wage Tax frorr 1 1/2% to 2% and earmarking the revenue from the 1/z% increase. Expenditures in the investment budget are restricted to three purposes: o Economic Development o Neighborhood Re -Development o Capital and Infrastructure Investment Exhibit 7 CITY OF PADUCAH, KENTUCKY PADUCAH JUNIOR COLLEGE, INCORPORATED STATEMENT OF CURRENT FUNDS REVENUE, EXPENDITURES, AND OTHER CHANGES YEAR ENDED JUNE 30, 2002 Revenues: Local appropriations Expired term endowments Federal grants Local grants and contracts Sales and services of educational activities Other sources Total current revenues Expenditures and Nonmandatory Transfers: Educational and general: Grants Public service Academic support Institutional support Operation and maintenance of plant Scholarship and fellowships Total educational and general Nonmandatory transfers to/(from) for: Additions to plant and equipment'. Quasi -endowment funds appropriated Total nonmandatory transfers Total expenditures and nonmandatoty transfers NET INCREASE (DECREASE) IN FUND BALANCES Current Year Unrestricted Restricted Total $ 709,631 $ - $ 709,631 212,407 - 212,407 985,000 - 985,000 60,000 - 60,000 80,017 - 80,017 18,726 - 18,726 2,065,781 - 2,065,781 204,383 - 204,383 205,952 - 205,952 35,740 - 35,740 316,708 - 316,708 147,847 - 147,847 140,033 - 140,033 1,050,663 - 1,050,663 833,852 - 833,852 (36,769) - (36,769) 797,083 - 797,083 1,847,746 - 1,847,746 $ 218,035 $ - $ 218,035 The notes to the financial statements are an integral part of this statement -28- CITY OF PADUCAH, KENTUCKY PADUCAH JUNIOR COLLEGE, INCORPORATED STATEMENT OF CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2002 Revenues and Other Additions: Current fund revenues Private gifts - restricted Investment income - restricted Realized gains (losses) on investments: Restricted Unrealized losses on investments: Restricted Expended for plant facilities Total revenues and other additions Expenditures and Other Deductions: Educational and general expenditures Expended for plant facilities Depreciation of plant facilities Expired term endowments Total expenditures and other deductions Transfers Among Funds - Additions/ (Deductions): Nonmandatory transfers for: Additions to plant and equipment Quasi -endowment funds appropriated Total transfers among funds - additions/(deductions) Net increase/(decrease) for the year Fund balances at beginning of year FUND BALANCES AT END OF YEAR Exhibit 8 Current Funds Loan Unrestricted Restricted Funds $2,065,781 $ - $ - (408) 2,065,781 - (408) 1,050,663 - 1,050,663 - (833,852) - - 36,769 - (797,083) - - 218,035 - (408) 407,935 - 16,604 $ 625,970 $ - $16,196 The notes to the financial statements are an integral part of this statement. -29- Plant Funds Endowment and Investment in Similar Funds Unexpended Plant 288,774 - - 168,154 26,761 - 3,052 (231,473) - - - - 2,315,861 228,507 26,761 2,315,861 - 2,315,861 - - 471,845 '11'7 AlV7 212,407 2,315,861 471,845 (36,769) (36,769) (20,669) 4,666,865 $4,646,196 833,852 833,852 (2,289,100) 2,677,868 2,726,712 $ 437,612 PLi6L7A47.1 $16,806,902 -30- ASSETS Cash and cash equivalents Investments available for sale, at fair value Investments, restricted Receivables: Accounts Interest Property taxes Other Prepaid items Inventory Restricted assets Other assets Land Buildings Furniture Machinery and equipment Utility plant Less accumulated depreciation TOTAL ASSETS CITY OF PADUCAH, KENTUCKY DISCRETELY PRESENTED COMPONENT UNITS COMBIlJING BALANCE SHEET JUNE 30, 2002 Paducah Paducah Water Mainstreet Works $23,138 $ 495,216 Exhibit 9 Paducah Transit Forest Authority Hills $ 332,165 $ 693,573 - 2,877,071 - 49,875 - 344,923 2,532 - - - - 3,344 32,982 - 220,005 9,212 - - - 14,235 - 374,644 13,360 10,615 - 68,216 - - - 924,197 - - - - 9,100 - - - 1,271,141 - - - 1,902,059 309,100 - 49,302,316 - - - (18,517,768) (1,173,846) (244,135) $56,120 $35,868,815 $2,576,516 $ 845,819 The notes to the financial statements are an integral part of this statement. -31- Paducah Paducah Power Junior System College Totals $ 279,563 $ 111,434 $ 1,935,089 - 698,415 6981415 4,493,263 4,764,925 12,185,134 2,371,080 5,000 2,723,535 - - 3,344 - 579,677 579,677 447,544 153,819 863,562 38,828 - 53,063 1,380,882 - 1,779,501 - - 68,216 133,583 239,620 1,297,400 15,409 142,033 1667542 - 17,594,321 18,865,462 - 1,258,756 1,258,756 - - 2,211,159 60,032,520 - 109,334,836 (23,839,261) (2,170,058) (45,945,068) $45,353,411 $23,377,942 $108,078,623 -32- (Continued) Exhibit 9 (Continued) CITY OF PADUCAH, KENTUCKY DISCRETELY PRESENTED COMPONENT UNITS COMBINING BALANCE SHEET JUNE 30, 2002 LIABILITIES, FUND EQUITY AND OTHER CREDITS Liabilities: Voucher and accounts payable Accrued payroll and payroll taxes Deferred revenues Deferred compensation benefits payable Accrued compensation absences Other liabilities Accrued interest payable Revenue bonds payable Public improvement bonds payable Public improvement loan payable Total liabilities Fund Equity and Other Credits: Contributed capital Investment in general fixed assets and plant Retained earnings (deficit) Fund balances: Reserved for scholarships and other Unreserved: Undesignated Total fund equity and other credits TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS Paducah Paducah Paducah Water Transit Forest Mainstreet Works Authority Hills $ 827 $ 299,539 $ 24,938 $ 18,376 2,880 - 25,858 14,235 - - - 17,172 783 - 19,348 103,463 - 824,857 29,047 61,165 - 5,965,526 - - 49,000 336,615 - - 53,490 7,426,537 99,191 214,411 11,097,337 1,843,045 - 17,344,941 634,280 631,408 2,630 - - - 2,630 28,442,278 2,477,325 631,408 $56,120 $35,868,815 $2,576,516 $845,819 The notes to the financial statements are an integral part of this statement. -33- Paducah Paducah Power Junior System College Totals $ 2,836,130 $ 13,545 $ 3,193,355 350,555 - 393,528 1,193,927 651,577 1,862,676 - 149,944 149,944 - - 123,594 611,859 30,000 1,556,928 225,566 - 225,566 - - 5,965,526 6,025,792 - 6,025,792 - - 385,615 11,243,829 845,066 19,882,524 - 12,940,382 - 16,806,902 16,806,902 34,109,582 - 52,720,211 2,580,425 2,580,425 3,145,549 3,148,179 34,109,582 22,532,876 88,196,099 $45,353,411 $23,377,942 $108,078,623 -34- CITY OF PADUCAH, KENTUCKY DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND EQUITY - GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 2002 Revenues: Intergovernmental Interest Miscellaneous Total revenues Expenditures: Planning and development Excess of revenues over (under) expenditures Fund balance July 1, 2001, as previously reported Adjustment to beginning fund balance FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -35- Exhibit 10 Paducah Mainstreet $37,934 381 53,744 92,059 92,783 (724) 3,354 $ 2,630 Exhibit 11 CITY OF PADUCAH, KENTUCKY DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - PROPRIETARY FUND TYPES YEAR ENDED JUNE 30, 2002 Nonoperating Revenues (Expenses): Investment income Interest expense Amortization of deferred debit Grants Amortization Other Total nonoperating revenues (expenses) Net income (loss) Other Changes in Retained Earnings: Depreciation allocable to contributed capital Transfer to contributed capital Retained earnings, July 1, 2001 RETAINED EARNINGS, JUNE 30, 2002 182,462 Paducah Paducah 311,382 Paducah (868) - (301,519) Water Transit Forest Power (59,211) Operating Revenues: Works Authority Hills System Totals Charges for services $ 5,659,661 $2,419,637 $1,216,095 $37,479,079 $46,774,472 Operating Expenses: (416,675) 2,218,162 33,544 (211,313) 1,623,718 (148,759) Cost of sales 4,231,343 3,041,050 1,286,522 34,968,157 43,527,072 Depreciation and amortization 1,160,402 133,869 24,205 2,166,424 3,484,900 Total operating expenses 5,391,745 3,174,919 1,310,727 37,134,581 47,011,972 Operating income (loss) 267,916 (755,282) (94,632) 344,498 (237,500) Nonoperating Revenues (Expenses): Investment income Interest expense Amortization of deferred debit Grants Amortization Other Total nonoperating revenues (expenses) Net income (loss) Other Changes in Retained Earnings: Depreciation allocable to contributed capital Transfer to contributed capital Retained earnings, July 1, 2001 RETAINED EARNINGS, JUNE 30, 2002 182,462 5,170 33,544 90,206 311,382 (350,532) (868) - (301,519) (652,919) (59,211) - - - (59,211) - 2,007,546 - - 2,007,546 (25,487) - - - (25,487) (163,907) 206,314 - - 42,407 (416,675) 2,218,162 33,544 (211,313) 1,623,718 (148,759) 1,462,880 (61,088) 133,185 1,386,218 112,256 - - 112,256 - (1,591,799) - - (1,591,799) 17,493,700 650,943 692,496 33,976,397 52,813,536 $17,344,941 $ 634,280 $ 631,408 $34,109,582 $52,720,211 The notes to the financial statements are an integral part of this statement. -36- Exhibit 12 CITY OF PADUCAH, KENTUCKY DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF CASH FLOWS - PROPRIETARY FUND TYPES YEAR ENDED JUNE 30, 2002 TOTAL CASH AND CASH EQUIVALENTS PER STATEMENT OF CASH FLOWS $ 495,216 $ 332,165 $693,573 The notes to the financial statements are an integral part of this statement. -37- Paducah Paducah Water Transit Forest Cash Flows from Operating Activities: Works Authority Hills Operating income (loss) $ 267,916 $ (755,282) $ (94,632) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 1,160,402 133,869 24,205 Provision for losses on accounts receivable - - - Debt discount and issue cost - - - (Increase) decrease in: Receivables (22,732) (13,861) 5,843 Inventories 45,825 (5,831) (66) Other assets (159,359) 28,692 (5,127) Increase (decrease) in: Accounts payable and accrued expenses 115,511 37,252 38,536 Net cash provided (used) by operating activities 1,407,563 (575,161) (31,241) Cash Flows from Noncapital Financing Activities: Operating grants received - 596,849 - Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets (1,597,740) (1,599,044) (15,594) Interest paid on bonds and public improvement debt - - - Interest paid on long-term debt (353,332) (868) - Contributed capital 156,632 - - Proceeds from sale of capital assets 10,100 - - Proceeds from issuance of long-term debt - - - Principal paid on bond maturities and public improvement debt (936,782) - - Principal paid on long-term debt - (87,684) - Capital grant funding - 1,591,799 Net cash provided (used) by capital and related financing activities (2,721,122) (95,797) (15,594) Cash Flows from Investing Activities: Purchase of investment securities (2,133,941) - - Proceeds from sales and maturities of investment securities 2,409,689 - - Investment income 182,462 5,170 33,544 Net cash provided (used) by investing activities 458,210 5,170 33,544 Net increase (decrease) in cash and cash equivalents (855,349) (68,939) (13,291) Cash and cash equivalents, July 1, 2001 1,350,565 401,104 706,864 CASH AND CASH EQUIVALENTS, JUNE 30, 2002 $ 495,216 $ 332,165 $693,573 Reconciliation of Cash and Cash Equivalents to the Balance Sheet: Total cash and cash equivalents per the balance sheet $ 495,216 $ 332,165 $693,573 Adjustment for restricted cash and short-term investments - - - TOTAL CASH AND CASH EQUIVALENTS PER STATEMENT OF CASH FLOWS $ 495,216 $ 332,165 $693,573 The notes to the financial statements are an integral part of this statement. -37- Paducah Totals Power (Memorandum System Only) $ 344,498 $ (237,500) 2,166,424 3,484,900 195,974 195,974 (118,625) (118,625) (177,050) (207,800) (635,385) (595,457) 89,833 (45,961) 4,818 196,117 1,870,487 2,671,648 596,849 (2,560,726) (5,773,104) (301,519) (301,519) (354,200) 156,632 - 10,100 3,539,914 3,539,914 (285,503) (1,222,285) (87,684) 1,591,799 392,166 (2,440,347) (837) (2,134,778) - 2,409,689 90,206 311,382 89,369 586,293 2,352,022 1,414,443 1,520,804 3,979,337 $ 3,872,826 $ 5,393,780 $ 279,563 $1,800,517 3,593,263 3,593,263 $3,872,826 $5,393,780 -38- CITY OF PADUCAH, KENTUCKY NOTES TO THE FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1 - Summary of Significant Accounting Policies: The accounting policies of the City of Paducah (City) conform to generally accepted accounting principles as applicable to governmental units as prescribed by the Governmental Accounting Standards Board (GASB). The financial reporting entity, basis of accounting, and other significant policies employed by the City are summarized as follows: Financial Reporting Entity The City operates under a City Manager form of government. The Board of Commissioners consists of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Paducah (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Units The following component units have been presented as blended component units because the component unit's governing body is substantially the same as the governing body of the City, or the component unit provides services almost entirely to the primary government. Paducah Public Improvement Corporation - The Mayor and Commissioners serve as the governing body for the Corporation. Although it is legally separate from the City, the Paducah Public Improvement Corporation is reported as if it were part of the primary government because its sole purpose is to finance long-term debt since the City may not legally obligate itself beyond one year. Police and Firefighters' Retirement Fund - This Retirement Fund was established for the benefit of the police and firemen of the City. It is administered by a Board of Trustees consisting of the Mayor, City Finance Director and representatives of the Police and Fire Departments. The Board is authorized to establish benefit levels and to approve actuarial assumptions used in the determination of contribution levels. Discretely Presented Component Units The component unit column in the combined financial statements includes the financial data of the City's other component units. They are reported in a separate column to emphasize that they are legally separate from the City. The following component units are included in the reporting entity because of their financial relationship with the City. Paducah Water Works - The City of Paducah Water Works Commission is appointed by the Mayor. The rates for user charges and bond issuance authorizations are subject to approval by the City Commission of the City of Paducah. Transit Authority of the City of Paducah - The Transit Authority's governing board is appointed by the Mayor of the City of Paducah. The City is the grantee agency receiving, on behalf of the Transit Authority, its principal revenues. The City also contributes substantially to the operation of the Authority by providing cash subsidies and facilities. Forest Hills Village, Inc. - The Corporation's Board is appointed by the City, and their only purpose is to manage City of Paducah properties known as "Forest Hills Housing Development". The City and Corporation have a lease agreement detailing the terms and conditions of operations. (Continued) -39- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Account Policies: Discretely Presented Component Units Paducah Power System - The members of the Electric Plant Board are appointed by the Mayor. The system provides a financial benefit to the City through a payment in lieu of taxes. Paducah Junior College, Incorporated - The Board of Trustees of the junior college are appointed by the Mayor. The College is a part of the University of Kentucky Community College System which is now administered by the Kentucky Community and Technical College System. Under this system, the University of Kentucky receives the monies from student tuition, fees and other related income and provides the financing for the operational budget of the College. A tax levied and collected by the City is a primary revenue source for the College. These funds, as well as gifts and grants made to the College, may be used for the acquisition or improvement of property or to finance programs beyond the level of those normally provided by community colleges in the University of Kentucky system. The financial statements of Paducah Junior College have been prepared using the accrual basis of accounting as defined by the AICPA Industry Guide for Colleges and Universities. Paducah Mainstreet, Inc. — The governing board consists of sixteen members appointed by the Mayor. Paducah Mainstreet is an organization that provides for the preservation and revitalization of the historic buildings in downtown Paducah, Kentucky. Complete financial statements of the individual component units can be obtained from their respective administrative offices in the following locations: Paducah Water Works 401 Washington Street Paducah, Kentucky 42003 Transit Authority of the City of Paducah 300 South Fifth Street Paducah, Kentucky 42001 Forest Hills Village, Inc. 238 Highland Boulevard Paducah, Kentucky 42003 Related Organizations Paducah Power System 1500 Broadway Paducah, Kentucky 42001 Paducah Junior College, Incorporated 4810 Blandville Road Paducah, Kentucky 42001 Paducah Mainstreet, Inc. 124 Broadway Paducah, KY 42001 City officials are also responsible for appointing the members of boards of other organizations, but the City's accountability for these organizations does not extend beyond appointing authority. The organizations listed below are notable related organizations which have not been included in the City's report. Paducah Housing Authority — The Paducah Housing Authority (PHA) is a legally separate entity that provides for construction, operation and management of low income housing projects within the City. PHA is a legally separate entity and is not financially accountable to the City. This organization is not included as a component unit of the City. Joint Sewer Agency — As of July 1, 1999, the assets and liabilities of the Wastewater/Stormwater Fund were transferred to the Paducah -McCracken County Joint Sewer Agency pursuant to a municipal order dated June 29, 1999. The Paducah -McCracken County Joint Sewer Agency is a legally separate entity and is not financially accountable to the City. This organization is not included as a component unit of the City. (Continued) CN2 CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1 - Summary of Significant Accounting Policies: Basis of Presentation, Fund Accounting The government uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self -balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds are classified into three categories: governmental, proprietary, and fiduciary. Each category, in turn, is divided into separate "fund types". Account groups are classified into General Fixed Assets and General Long -Term Debt. Governmental Funds are used to account for all or most of a government's general activities, including the collection and disbursement of earmarked monies (special revenue funds), the acquisition or construction of general fixed assets (capital projects funds), and the servicing of general long-term debt (debt service funds). The general fund is used to account for all activities of the general government not accounted for in some other fund. The funds comprising the governmental funds are as follows: General Fund: (there is only one general fund). Special Revenue Funds: Municipal Aid, Emergency Communication Service Fund, Court Awards Fund, and Federal, State, and Local Grants. Debt Service Fund: Public Improvement Bonds, Public Improvement Notes, and Capital Lease. Capital Project Funds: General Capital Improvements and Downtown Capital Improvements. Proprietary Funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the government (internal service funds). The various enterprise funds of the City are as follows: Solid Waste, Wastewater/Stormwater, Civic Center, and Telecommunications and Information Systems Authority (TISA) The internal service funds of the City are as follows: Fleet Maintenance, Fleet Lease Trust, Insurance Fund, and Health Insurance Fund (Continued) -41- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Accounting Policies: Basis of Presentation, Fund Accounting Trust and Agency Funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the government. When these assets are held under the terms of a formal trust agreement, either a pension trust fund, a nonexpendable trust fund or an expendable trust fund is used. The terms "nonexpendable" and "expendable" refer to whether the government is under an obligation to maintain the trust principal. Agency funds generally are used to account for assets that the government holds on behalf of others as their agent. The funds included in this group are: Police and Firefighters' Retirement Fund (Pension Trust), Appointive Employees' Pension Fund (Pension Trust), Oak Grove Cemetery Trust (Nonexpendable Trust), Rinkleff Estate (Expendable Trust), Property Taxes (Agency), and Payroll Fund (Agency). Fixed Assets and Long, -Term Debt accounting and reporting applications with respect to a fund are determined by its measurement focus. All Governmental Funds and Expendable Trust Funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources". Governmental Fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks and lighting systems are not capitalized along with other general fixed assets. Depreciation is not provided on general fixed assets. All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair market value on the date donated. Long-term debt expected to be financed from governmental funds are accounted for in the General Long -Term Debt Account Group, not in the governmental funds. The two account groups are not "funds". They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are, instead, reported as liabilities in the General Long -Term Debt Account Group. All proprietary funds and nonexpendable trust and pension trust funds are accounted for on a cost of services or "capital maintenance" measurement focus. This means that all assets and liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. (Continued) -42- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Account Policies: Basis of Presentation, Fund Accounting Depreciation of all exhaustible fixed assets used by propriety funds is charged as an expense against their operations. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Buildings Utility plant Improvements Equipment Basis of Accounting 50 Years 40-60 Years 10-20 Years 5-25 Years The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expendable trust funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on a balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. All proprietary funds, nonexpendable trust funds and pension trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund -type operating statements present increases (revenues) and decreases (expenses) in net total assets. The modified accrual basis of accounting is used by all governmental fund types, expendable trust funds and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon thereafter to be used to pay liabilities of the current period. The City considers taxes as available if they are collected within 60 days after year end. A one-year availability period is used for revenue recognition for all other governmental fund revenues. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. Those revenues susceptible to accrual are taxes, intergovernmental, employer and employees' contributions to trust funds, interest revenue and charges for services. License and permit revenues are not susceptible to accrual because generally they are not measurable until received in cash. The accrual basis of accounting is utilized by proprietary fund types, pension trust funds and nonexpendable trust funds. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Pension Plan member and employer contributions are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. (Continued) -43- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Accounting Policies: Basis of Accounting The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in these financial statements: 1. Prior to July, the City Manager submits to the City Commission a proposed operating budget for the fiscal year commencing on July 1. The operating budget includes proposed expenditures and the means of financing those. 2. Public hearings are conducted by the City to obtain taxpayer comments. 3. Prior to July, the budget is legally enacted through passage of an ordinance. 4. The City Manager is authorized to transfer budgeted amounts between department line items; however, any revisions that alter the total expenditures of any department must be approved by the City Commission. 5. Formal budgetary integration is employed as a management control device during the year and annual budgets have been legally adopted for the General Fund, Emergency Communication Service Fund, Municipal Aid Fund, Court Awards Fund, General Capital Improvements, Downtown Capital Improvements, TISA Fund, Solid Waste Fund, Wastewater/Stormwater Fund, Civic Center Fund, Fleet Maintenance, Insurance Fund, and Health Insurance Fund. 6. Budgets are adopted on a basis consistent with GAAP. The City does not budget the Section Eight Housing Special Revenue Fund and, accordingly, the applicable columns of the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Exhibit 3) exclude amounts relating to the unbudgeted fund. The City does legally adopt budgets for certain special revenue funds including the Municipal Aid Program Fund, Emergency Communication Service Fund, Court Awards Fund, and all federal, state, and local grant funds. A reconciliation of actual results for budgeted and unbudgeted Special Revenue Funds follows: Budgeted funds Unbudgeted fund: Section Eight Housing TOTALS Revenues Expenditures $2,254,082 $3,614,404 1,576,825 1,544,522 (Uses) S&12126 -44- $1,026,944 Other Financing Fund Sources Balance (Uses) June 30, 2002 $807,464 $1,026,944 255,124 $807.464 $1.282.068 (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1 - Summary of Significant Accounting Policies: Budgets and Budgetary Accounting Presented budget amounts are originally adopted, or as amended by the City Commission. Appropriations lapse at year end; however, uncompleted capital projects may be reappropriated at the beginning of each fiscal year. Revisions made to the original expenditure budget (including operating transfers out) for each fund were as follows: Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds. In accordance with generally accepted accounting principles (GAAP), encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. There are no encumbrances at June 30, 2002. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited to applicable bond covenants. (Continued) -45- Original Total Revised BudSet Revisions Budget General Fund $25,326,205 $ (859,875) $24,466,330 Special Revenue Funds: Municipal Aid Program 1,400,400 309,620 1,710,020 Emergency Communication Service Fund 1,099,450 (66,410) 1,033,040 Court Awards Fund 30,000 5,565 35,565 Small Grant Fund 40,000 18,010 58,010 CDBG Grant Fund 1,920,900 (1,856,770) 64,130 HOPE 3 Implementation Grant Fund 110,000 (110,000) - Home Grant Fund 1,388,870 (964,550) 424,320 HUD Revolving Fund 110,000 21,780 131,780 Paducah Housing Authority Police Grant Fund 150,000 2,560 152,560 Debt Service Fund 847,075 (71,340) 775,735 Capital Projects Funds: General Capital Improvements 4,448,000 (2,775,360) 1,672,640 Downtown Capital Improvements - 5,852,675 5,852,675 Enterprise Funds: Solid Waste Fund 3,671,185 (376,765) 3,294,420 Civic Center Fund 43,500 (2,330) 41,170 TISA Fund 178,230 (67,595) 110,635 Internal Service Funds: Fleet Maintenance 397,000 33,505 430,505 Fleet Lease Trust 784,990 (554,470) 230,520 Insurance Fund 892,600 (90,090) 802,510 Health Insurance Fund 2,798,625 66,940 2,865,565 TOTALS 45.637.030 (1.484.900) 44.152.130 Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds. In accordance with generally accepted accounting principles (GAAP), encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. There are no encumbrances at June 30, 2002. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited to applicable bond covenants. (Continued) -45- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Accounting Policies: Investments Investments are reported at fair value which is determined using selected bases. Short-term investments are reported at cost, which approximates fair value. Inventories Inventories are stated at cost on a first -in, first -out basis. Property Tax The City bills and collects its own property taxes. The City elects to use the annual property assessment prepared by McCracken County as its base to apply the property tax rate. According to Kentucky Revised Statutes, the assessment date for the City must conform to the assessment date of McCracken County, and the annual increase in the property tax levy cannot exceed 4%. City property tax revenues are recorded as a receivable when assessed because the City has an enforceable legal claim to the resources. At this time, the receivable is offset by deferred revenue. Property tax revenues are recognized during the period for which they are levied. The due dates and collection period for all property taxes, exclusive of vehicle taxes, for the fiscal year ended June 30, 2002, are as follows: Description Assessment and enforceable lien Levy Face value amount payment dates Delinquent date - 10% penalty plus 1/2% per month Compensated Absences Date January 1, 2001 October 3, 2001 1" half by November 30, 2001 2°d half by February 28, 2002 I" half - December 1, 2001 2°d half - March 1, 2002 Accumulated unpaid vacation, sick pay, and other employee benefit amounts are accounted for in accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences. Governmental funds report the estimated current portion of accrued compensated absences on their balance sheets, with the long-term portion of the liability reported in the General Long -Term Debt Account Group. Proprietary fund types report both the current and long-term portions on their balance sheets. Accumulations for vacation pay are restricted to a maximum of 50 days and provide vesting rights upon completion of six months service. Accumulations for sick pay are restricted to a maximum of 150 days and provide payment to employees or beneficiaries for accumulations in excess of 50 days and up to 120 days upon death or retirement from City service. Fund Equity Contributed capital is recorded in proprietary funds that have received capital grants, contributions from developers or customers, and permanent transfers of equity from other funds or account groups. Investments in general fixed assets represent cumulative amounts expended by governmental funds for general fixed assets. Retained earnings (deficits) reflect cumulative profits and losses of proprietary funds. Fund balances - reserved represents those portions of fund equity legally segregated for a specific future use or those not appropriable for expenditure. Fund balance - unreserved represents those portions of fund equity tentatively planned for a future use or totally undesignated. (Continued) IM CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 1- Summary of Significant Accounting Policies: Interfund Transactions Quasi -external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions, except quasi -external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. Statement of Cash Flows In September, 1989, the Governmental Accounting Standards Board issued Statement No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting. The City adopted the provisions of the Statement in its 1991 financial statements. For purposes of the statement of cash flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Policy Regarding Use of FASB Pronouncements for Proprietary Activities The City's proprietary activities follow all FASB Statements and Interpretations issued on or before November 30, 1989, except those that conflict with GASB pronouncements. FASB pronouncements issued after November 30, 1989, do not apply to proprietary activities unless specifically adopted in a GASB pronouncement. Memorandum Only - Total Columns Total columns on the general purpose financial statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in the columns do not present financial position, results of operations or cash flows in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 2 - Deposits and Investments: Deposits - Primary Government At year end, the carrying amount of the City's demand deposits was $7,907,650 and the bank balance was $8,594,859. The bank balance of bank certificates of deposit and repurchase agreements (classified as investments on the balance sheets) was $7,577,573. The bank balance is categorized as follows: Amount secured by the FDIC, or collateralized with securities held by the City in its name $ 500,000 Amount collateralized with securities held by the pledging institution's agent in the City's name 11,618,168 Amount secured by Federal Home Loan Bank letters of credit 3,554,264 Amount collateralized with securities held by the pledging financial institution 500.000 TOTAL BANK BALANCE $ 16.172.432 (Continued) -47- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 2 - Deposits and Investments: Investments Kentucky Revised Statutes (KRS 66.480) authorize the City to invest in: 1. Obligations of the U.S. Treasury, agencies, and instrumentalities. Such investments may be accomplished through repurchase agreements reached with national or state banks chartered in Kentucky; 2. Bonds or certificates of indebtedness of the state of Kentucky and of its agencies and instrumentalities; 3. Savings and loan associations insured by the U.S. government; 4. Interest-bearing deposits in national or state banks chartered in Kentucky and insured by an agency of the U.S. government; 5. Deposit accounts with banking institutions; 6. State treasurer investment pool. The Police and Firemen's Retirement Fund is also authorized to invest in real estate mortgage notes, bonds and other interest bearing or dividend paying securities. Investments made by the City, including repurchase agreements, are summarized below. The investments that are represented by specific identifiable investment securities are classified as to credit risk by the three categories described below: Category 1 - Insured or registered, with securities held by the City or its agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterpart, or by its trust department or agent, but not in the City's name. Investments of the primary government are classified as follows: U.S. government securities Mortgage backed securities Corporate bonds and notes Investment in mutual funds Total investments (excluding $7,577,573 of bank CD's) -48- Cateiiory Fair 1 2 3 Value $3,453,251 $- $- $3,453,251 99,945 - - 99,945 1,439,578 1,439,578 4.992.774 S- & 4,992,774 4,848,682 (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 2 - Deposits and Investments: Investments Investments of the discretely presented component units are classified as follows: U.S. government securities Corporate bonds and notes Corporate equity stocks Investment in mutual funds and money markets Total investments (excluding $3,777,071 of bank CD's and savings accounts), including $8,408,063 classified as restricted on combined balance sheet Category Fair 1 2 3 Value $ 599,820 $- $- $ 599,820 585,540 - - 585,540 975,093 - 975,093 2.160.453 $_- $- 2,160,453 6,946,025 The following methods and assumptions were used by the entities in estimating fair values for financial instruments: Certificates of Deposit - The carrying amounts reported for certificates of deposit approximate their fair value. Investment Securities (including Mortgage -Backed Securities) - Fair values for investment securities are based on quoted market prices. Note 3 - Individual Fund Interfund Receivable and Pavable Balances: A summary of interfund account balances is as follows: Interfund Interfund Receivable Payable General Fund $258,908 $ - Special Revenue Funds: Municipal Aid Program - 19,958 Small Grants Fund - 10,724 PHA Police Grant Fund - 10,352 Section 8 Housing Fund - 29,444 Capital Project Fund - 4,000 Internal Service Funds: Health Insurance Fund - 83,712 Fiduciary Funds: Property taxes - 100,718 TOTALS (Continued) -49- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 4 — Chan2es in General Fixed Assets: A summary of changes in General Fixed Assets follows: Primary government: Land Buildings and improvements Equipment Furnishings and fixtures Vehicles Total primary government Component units: Equipment Additions Retirements Balance and and Balance July 1, 2001 Transfers In Transfers Out June 30, 2002 Civic $ 5,054,656 $ - $ - $ 5,054,656 13,026,970 - - 13,026,970 5,279,401 98,309 6,400 5,371,310 250,828 - 1,500 249,328 4,382,397 39,079 200,938 4,220,538 Entity 27,994,252 137,388 208,838 27,922,802 16,385 Total component unit - 16,385 - TOTALS $27,994,252 A summary of property, plant, and equipment of proprietary funds is presented below. 16,385 16,385 27.939,187 Less accumulated depreciation (2,421,274) (131,202) (120,752 (177,571 (741,5631 (3,592,3621 (45,945,068) (49,537,430) NET PROPERTY, PLANT, AND EQUIPMENT $ 1.111.775 $ 170.513 $ 85.891,687 $ 88.826.705 (Continued) -50- Enterprise Funds Internal Service Fund Solid Civic Fleet Fleet Total Total Waste Center TISA Maintenance Lease Primary Component Reporting Fund Fund Fund Fund Trust Govt. Units Entity Land $ 65,908 $ - $ - $ - $ - $ 65,908 $ 166,542 $ 232,450 Buildings 40,658 284,224 - 20,000 - 344,882 18,865,462 19,210,344 Machinery and equipment 3,426,483 17,491 349,441 212,330 2,110,845 6,116,590 3,469,915 9,586,505 Utility plant - - - - - 109.334.836 109.334.836 3,533,049 301,715 349,441 232,330 2,110,845 6,527,380 131,836,755 138,364,135 Less accumulated depreciation (2,421,274) (131,202) (120,752 (177,571 (741,5631 (3,592,3621 (45,945,068) (49,537,430) NET PROPERTY, PLANT, AND EQUIPMENT $ 1.111.775 $ 170.513 $ 85.891,687 $ 88.826.705 (Continued) -50- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 5 — Long -Term Liabilities: The following is a summary of changes in Primary Government long-term debt for the year ended June 30, 2002: General Long -Term Debt: General obligation bonds: Convention and Arts Center — Series 2001, 3.50% - 5.00% Capital lease General Fund accrued compensated absences Enterprise Funds: Accrued compensated absences: Solid Waste Fund Internal Service Funds: Accrued compensated absences: Fleet Maintenance Fund TOTAL LONG-TERM DEBT The long-term debt consists of the following: General Obligation Bonds Beginning Ending Balance Additions Reductions Balance $ 9,290,000 $ - $ 215,000 $ 9,075,000 381,330 - 147,276 234,054 1,290,795 21,583 - 1,312,378 11,398 6,298 - 17,696 32,530 - 1,672 30,858 11.006.053 2 $ 10.669.986 The City of Paducah issued general obligation bonds in June, 2001, to finance construction of the new Four Rivers Center for the Performing Arts and the expansion of the Julian Carroll Convention Center. These bonds are required to be fully paid within 25 years from the date of issue and are backed by the full faith and credit of the City. While these bonds are issued by the City, 50% of the principal amount of the bonds is being issued on behalf of the County of McCracken, Kentucky which intends to participate on an equal basis with the City in financing the projects and has issued the City a general obligation note in a principal amount equal to 50% of the principal amount of the bonds and bearing interest at the same rates as the City's bonds in order to secure the County's obligations to the City. In accordance with an Interlocal Cooperation Compact between the City, McCracken County, Kentucky (the County), and the Paducah -McCracken County Tourist and Convention Commission (the Bureau), principal and interest payments on the bonds are being made from an additional 2% transient room tax collected by the County with the remaining payments split evenly between the City, the County, and the Bureau. The annual debt service requirements to maturity, including principal and interest, for general long-term debt as of June 30, 2002, are as follows: TOTALS -51- (Continued) General Obligation Year Ending Bonds June 30 Principal Interest 2003 $ 225,000 $ 420,025 2004 230,000 412,150 2005 240,000 404,100 2006 250,000 394,500 2007 260,000 384,500 Later years 7,870,000 4,362,855 TOTALS -51- (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 5 — Long -Term Liabilities: Capital Lease On December 20, 1993, the City agreed to lease new fire equipment through the Kentucky Municipal Finance Corporation. All the equipment was acquired prior to June 30, 1996, at a total cost of $1,674,251. The City paid $400,000 of the purchase price, with the remaining $1,274,251 financed with the lease. The lease is classified as a capital lease. The leased assets and related obligations are accounted for in the General Fixed Assets Account Group and the General Long -Term Account Group, respectively. Assets under capital leases totaled $1,274,251 at June 30, 2002. The following is a schedule of future minimum lease payments under this capital lease, together with the net present value of the minimum lease payments as of June 30, 2002: Minimum lease payments for capital lease 243,648 Less: amount representing interest at the City's incremental borrowing rate of interest 9,594 PRESENT VALUE OF MINIMUM LEASE PAYMENTS Accrued Compensated Absences Compensated absence obligations arise from amounts due to City employees for vested amounts of vacation pay and sick pay which will be payable in the future. Amounts accrued at June 30, 2002, are as follows: General Long -Term Debt Account Group Accrued sick leave $ 693,417 Accrued vacation leave 788,588 Applicable payroll taxes 113,373 Total 1,595,378 Less current portion LONG-TERM PORTION 59,E 283,000 c_ c Proprietary Funds Solid General Year Ending Long -Term Debt June 30 Account Group 2003 $162,432 2004 81,216 Minimum lease payments for capital lease 243,648 Less: amount representing interest at the City's incremental borrowing rate of interest 9,594 PRESENT VALUE OF MINIMUM LEASE PAYMENTS Accrued Compensated Absences Compensated absence obligations arise from amounts due to City employees for vested amounts of vacation pay and sick pay which will be payable in the future. Amounts accrued at June 30, 2002, are as follows: General Long -Term Debt Account Group Accrued sick leave $ 693,417 Accrued vacation leave 788,588 Applicable payroll taxes 113,373 Total 1,595,378 Less current portion LONG-TERM PORTION 59,E 283,000 c_ c Proprietary Funds Solid Fleet Waste Maintenance $15,224 $23,114 40,230 24,130 4,242 3,614 59,696 50,858 42,000 20,000 7 9 � (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 6 - Pension Plans - City of Paducah: The City provides retirement benefits to its employees through three pension funds. Two of these funds are single -employer defined benefit funds and are administered by the City. These funds are Police and Firefighters' Pension Fund (PFPF) and Appointive Employee' Pension Fund (AEPF). The other pension is a multi-employer public employee retirement fund administered by the Kentucky County Employees Retirement System (CERS). The City also participates in two deferred compensation plans. Information regarding these plans follows: Single Employer Defined Benefit Funds Accounting Policies Basis of Accounting - The financial statements are prepared using the accrual basis of accounting. Plan member and employer contributions are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Funding - The Appointive Employee's Pension Fund Board and the City of Paducah Police and Firefighter's Pension Fund Board are responsible for establishing or amending contribution rates and requirements for their respective plans. Valuation of Investments - Investments are reported at fair value. Investments are composed of securities valued at current market prices. Plan Descriptions and Contribution Information Membership of each plan consisted of the following at June 30, 2002, the date of the latest actuarial valuation: PFPF AEPF Plan membership: Active participants 8 - Beneficiaries 45 9 Retired participants 58 6 Total participants J-11 J5 Police and Firefighters' Pension Fund Plan Description: PFPF is a single -employer defined benefit plan. On August 1, 1988, the plan was closed to new entrants and current active duty police and firemen of the City were given a choice of remaining in this plan or transferring into the CERS. Effective August 1, 1988, the PFPF covered 21 active duty members; all other active duty members elected coverage under CERS. PFPF provides retirement, disability and death benefits to plan members and their beneficiaries. These benefits are determined by Kentucky Revised Statutes (KRS) sections 95.851 to 95.884. The plan financial statements are included in this audit report. Contributions: Plan members are required to contribute 8% of their annual covered salary. A member reserve is established for member contributions, less amounts transferred to reserves for retirement and disability and amounts refunded to terminated employees. (Continued) -53- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 6 — Pension Plans - City of Paducah: Single Employer Defined Benefit Funds Appointive Employees' Pension Fund Plan Description: AEPF is a single -employer defined benefit plan which covers past appointed employees of the City. In 1975, the City froze admission of new entrants into the plan. There are no active participants in the plan at June 30, 2002. The plan financial statements are included in this audit report. Contributions: Since there are only retired employees and beneficiaries receiving benefits, the City expects little or no additional pension obligation. The City has pledged to maintain benefits and the financial soundness of the plan by appropriations from the General Fund, as necessary. Cost -Sharing Multiple -Employer Defined Benefit Plan County Employees' Retirement System Plan Description: The City is a participant in the County Employees Retirement System (CERS), a cost sharing, multi-employer public employee retirement system. CERS provides retirement, disability, and death benefits to plan members. Retirement benefits may be extended to beneficiaries of plan members under certain circumstances. Cost -of -living adjustments are provided at the discretion of the State legislature. Kentucky Retirement Systems issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained by writing to Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky 40601-6124 or by calling 1-502-564-4646. Funding Policy: Hazardous position employees are required to contribute 8% to the plan and nonhazardous position employees are required to contribute 5% of their creditable compensation by State statute. The City is required by the same statute to contribute the remaining amounts necessary to pay benefits when due. For the years ended June 30, 2002, 2001 and 2000, the City contributed 6.41%, 7.17%, and 7.28%, respectively, of each nonhazardous employee's creditable compensation and 16.28%, 16.78%, and 17.55%, respectively, of each hazardous employee's creditable compensation. These actuarially determined rates are set by the Board of Trustees of Kentucky Retirement Systems. The City's contributions to CERS for the years ending June 30, 2002, 2001 and 2000, were $2,092,620, $2,101,513, and $2,164,676, respectively, equal to the required contributions for each year. Note 7 — Fund Equity and Budget Deficits: The following fund had a deficit in retained earnings at June 30, 2002: Health Insurance Fund Deficit Amount $190,055 No departments which adopted budgets annually had excess expenditures over appropriations for the fiscal year ended June 30, 2002. (Continued) -54- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 8 - Segment Information - Enterprise Fund: The government maintains four enterprise funds which are intended to be self-supporting through user fees charged for services to the public. Financial segment information as of and for the year ended June 30, 2002, is presented as follows: Solid Wastewater/ Civic Waste Stormwater Center Fund Fund Fund TISA Total Operating revenues $3,245,399 $ - $ 19,392 $ 70,800 $3,335,591 Depreciation and 388,161 amortization expense 330,345 - Operating income (loss) 43,114 - Operating transfers - - Net income (loss) 129,757 - Depreciation funded by contributed capital - - Property, plant and equipment additions 365,514 - Net working capital 1,531,334 - Total assets 2,893,424 188,813 Total equity 2,625,413 - Note 9 — Changes in Contributed Capital: During the year, contributed capital changed by the following amounts: Contributed capital, July 1, 2001 Adjustment to beginning balance Deduct: Depreciation allocable to contributed capital CONTRIBUTED CAPITAL, JUNE 30, 2002 -55- 9,105 48,711 388,161 (19,857) (39,811) (16,554) 10,000 - 10,000 (9,343) (39,811) 80,603 5,400 48,027 53,427 - 20,512 386,026 23,810 10,447 1,565,591 195,483 242,520 3,520,240 194,323 239,136 3,058,872 Civic Center Fleet Lease Fund TISA Trust $167,400 $256,888 $381,523 - - (60,514) (5,400)--(4&027) 60 514 (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 10 - Individual Fund Operating Transfers: Individual fund operating transfers were as follows for the year ended June 30, 2002: TOTALS Note 11— Component Unit Long -Term Debt: Long-term debt of the discretely presented component units consists of the following at June 30, 2002: Refunding Revenue Bonds of 1991 - Paducah Water Works The City of Paducah, Kentucky Refunding Bonds, Series of 1991, in the amount of $10,775,000 were issued for the purpose of defeasing certain bonds of the Revenue Refunding Bonds, Series of 1985. During the year ended June 30, 1998, Paducah Water Works refunded a portion ($6,075,000) of the 1991 bond issue by issuing $6,780,000 of 1997 revenue refunding bonds, Series 1997. At June 30, 2002, the total bonds that are considered extinguished under an in -substance defeasance (refund) is $13,745,000. The bonds are secured by a first pledge of the revenues of Paducah Water Works. City bond ordinances require that net revenues, as defined in the ordinances, equal or exceed 130% of the maximum annual debt service. Payment of bonds and related interest is fully guaranteed by the Municipal Investors Assurance Corporation. The following schedule summarizes the debt service requirements for the Refunding Revenue Bonds, Series of 1991: Operating Operating Fund Transfers In Transfers Out General Fund $ 3,789 $3,033,267 Special Revenue Funds: Interest Service Municipal Aid Fund 500,000 - Emergency Communication 2004 835,000 Service Fund 263,977 - Small Grant Fund 29,276 - Court Awards Fund - 3,789 HUD Revolving Fund 43,000 25,000 Debt Service Fund 255,375 - Capital Projects Funds: 135,725 2,155,725 CIP Fund 693,045 - Enterprise Funds: from advanced refunding (414.474) Civic Center Fund 10,000 - Internal Service Funds: 11 7 7.141.883 Fleet Maintenance 123,887 - Fleet Lease Trust 467,431 - Fiduciary Funds: Appointive Employee Pension Fund 75,000 - Police and Firemen's Pension Fund 597,276 - TOTALS Note 11— Component Unit Long -Term Debt: Long-term debt of the discretely presented component units consists of the following at June 30, 2002: Refunding Revenue Bonds of 1991 - Paducah Water Works The City of Paducah, Kentucky Refunding Bonds, Series of 1991, in the amount of $10,775,000 were issued for the purpose of defeasing certain bonds of the Revenue Refunding Bonds, Series of 1985. During the year ended June 30, 1998, Paducah Water Works refunded a portion ($6,075,000) of the 1991 bond issue by issuing $6,780,000 of 1997 revenue refunding bonds, Series 1997. At June 30, 2002, the total bonds that are considered extinguished under an in -substance defeasance (refund) is $13,745,000. The bonds are secured by a first pledge of the revenues of Paducah Water Works. City bond ordinances require that net revenues, as defined in the ordinances, equal or exceed 130% of the maximum annual debt service. Payment of bonds and related interest is fully guaranteed by the Municipal Investors Assurance Corporation. The following schedule summarizes the debt service requirements for the Refunding Revenue Bonds, Series of 1991: Total Debt Fiscal Year Principal Interest Service 2003 $ 800,000 $ 281,321 $1,081,321 2004 835,000 246,321 1,081,321 2005 870,000 209,790 1,079,790 2006 905,000 171,510 1,076,510 2007 950,000 131,690 1,081,690 Later years 2,020,000 135,725 2,155,725 Less deferred debit arising from advanced refunding (414.474) - (414,474) TOTALS 5.965.526 11 7 7.141.883 (Continued) -56- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 11- Component Unit Long -Term Debt: Note Payable, Kentucky Infrastructure Authority (KIA) - Paducah Water Works In connection with a merger with Reidland Water District, Paducah Water Works assumed a loan from the KIA. Interest rates range from 2.5% to 5.75%, with a .2% annual service fee. The annual requirements to amortize the outstanding debt as of June 30, 2002, are as follows: Year Ending June 30 Principal Interest Fee (0.2%) Total 2003 $ 22,653 $ 18,809 $ 673 $ 42,135 2004 24,321 17,631 628 42,580 2005 25,648 16,354 579 42,581 2006 26,974 14,976 528 42,478 2007 28,743 13,519 474 42,736 Later years 208,276 43,823 1,526 253,625 TOTALS Paducah Electric Plant Board 1991 Bond Issue In 1991, bonds amounting to $4,725,000 were issued to make improvements to the Paducah Power sub- station and renovation of the building that houses the System's offices, warehouse and storage. All assets of the System are pledged as collateral to the bond issue. Interest rates range from 6.25% to 6.30%. On November 1, 1998, the Utility issued $3.35 million in special revenue refunding bonds with interest rates between 3.60% and 4.20%. The Utility issued the bonds to advance refund $3.06 million of the outstanding Series 1991 general obligation bonds with a 6.30% interest rate and were secured by all assets of the Utility. The Utility used the net proceeds along with other resources to purchase the U. S. Government Securities. These securities were deposited in an irrevocable trust to provide for all future debt service on the refunded portion of the 1991 Series bonds maturing on or after January 1, 2002. As a result, that portion of the 1991 Series bonds is considered defeased and the Utility has removed the liability from its books. On November 9, 2001, the System issued $3.32 million in special revenue refunding bonds with interest rates between 3.00% and 4.25% and is secured by a first pledge of the net revenues of the System. The System issued the bonds to finance construction of a fiber optic network in the community. The following schedule summarizes the remaining debt service requirements: Total Debt Fiscal Year Principal Interest Service 2003 $ 295,000 $280,103 $ 575,103 2004 330,000 245,908 575,908 2005 345,000 233,057 578,057 2006 355,000 219,608 574,608 2007 370,000 205,757 575,757 2008-2012 2,085,000 792,080 2,877,080 2013-2017 2,550,000 330,980 2,880,980 TOTALS Bonds payable totaling $6,025,792 are recorded net of $304,208 unamortized bond discount and advance refunding deferred charges. (Continued) -57- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 12 - Commitments and Contingencies: Construction Commitment The City has an on-going contract for paving materials, equipment, and labor. As of June 30, 2002, the balance of the contract commitment was $1,042,298. Escrow Account Securing Note Payable The City has established a $300,000 escrow account which is included in General Fund investments to secure a note payable for the Greater Paducah Economic Development Council (GPEDC) for the construction of a speculation building that is to be built in the McCracken County Information Age Park. Grant Contingencies Amounts received from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. Note 13 - Risk Management and Litigation: The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage from commercial insurance companies to handle the risk of loss. There have been no decreases in insurance coverage from the prior year. There have been no settlements in excess of insurance coverage during the prior three years. An analysis of claims activity is presented below: Current Year Beginning of Claims and Fiscal Year Changes in Liability 1996-1997 $ - 1997-1998 - 1998-1999 - 1999-2000 - 2000-2001 26,455 - 2001-2002 - Current Year Claims and Actual Balance at Changes in Claim Fiscal Estimates Payments Year End $ 85,326 $ 85,326 - 96,101 96,101 - 26,457 26,457 - 26,455 26,455 - 102,380 102,380 - 2,879 2,879 - During fiscal year 1999, the City established the Health Insurance Fund (an internal service fund) to account for and finance employee medical costs relating to the City's employee self-insured medical benefit plan that went into effect as of July 1, 1999. The health insurance provides coverage for up to $80,000 for each covered individual. The City purchases commercial insurance (reinsurance) for claims in excess of the coverage provided per individual or in excess of the maximum aggregate limit of $2,000,000. Self-insurance costs are accrued based on claims reported within 90 days of the balance sheet date as well as an estimated liability for claims incurred but not reported. The total accrued liability for self-insurance costs was $285,000 at June 30, 2002. (Continued) -58- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 13 - Risk Management and Litigation: The analysis of claims activity is presented below: Several lawsuits are pending involving citizens' complaints and the City of Paducah. Various allegations have been made seeking damages which the legal counsel of the City, along with its management, have determined to be immaterial to the City's financial position. Note 14 - Lease Agreements: The City leases certain property to various lessees under agreements that have various expiration dates through June 30, 2079. Rental revenue received from leased property during 2002 totaled $227,179. The following is a schedule of future minimum rental income from operating leases at June 30, 2002: Current Year Income Beginning of Claims and Actual Balance at Fiscal Year Changes in Claim Fiscal Liabilitv Estimates Payments Year End 1999-2000 $ - $1,874,033 $1,874,033 $ - 2000-2001 - 2,636,969 2,351,969 285,000 2001-2002 285,000 2,601,988 2,601,988 285,000 Several lawsuits are pending involving citizens' complaints and the City of Paducah. Various allegations have been made seeking damages which the legal counsel of the City, along with its management, have determined to be immaterial to the City's financial position. Note 14 - Lease Agreements: The City leases certain property to various lessees under agreements that have various expiration dates through June 30, 2079. Rental revenue received from leased property during 2002 totaled $227,179. The following is a schedule of future minimum rental income from operating leases at June 30, 2002: TOTAL MINIMUM LEASE RECEIPTS UJ16AU The City is also leasing land to the Four Rivers Center for the Peforming Arts, Inc. for a primary term of 99 years. No rental revenue is being collected from this lease. The rental for the primary term of the lease is the construction of the performing arts center. Note 15 - Reclassification of Beginning Fund Balance: A reclassification was made to the following beginning fund balances as follows: June 30, 2001, balance as previously reported Section 8 Housing adjustment Depreciation allocable to contributed capital Adjustment to deferred revenue JULY 1, 2001, BALANCE AS RESTATED -59- General Fleet Capital Lease Section 8 Improvements Trust Housing $1,082,286 $1,262,186 $ 271,838 - (49,017) - 60,514 - 150,100) - - 1.322.700 (Continued) Lease Income 2003 $ 206,942 2004 211,952 2005 216,963 2006 141,973 2007 61,973 Future years 336,615 TOTAL MINIMUM LEASE RECEIPTS UJ16AU The City is also leasing land to the Four Rivers Center for the Peforming Arts, Inc. for a primary term of 99 years. No rental revenue is being collected from this lease. The rental for the primary term of the lease is the construction of the performing arts center. Note 15 - Reclassification of Beginning Fund Balance: A reclassification was made to the following beginning fund balances as follows: June 30, 2001, balance as previously reported Section 8 Housing adjustment Depreciation allocable to contributed capital Adjustment to deferred revenue JULY 1, 2001, BALANCE AS RESTATED -59- General Fleet Capital Lease Section 8 Improvements Trust Housing $1,082,286 $1,262,186 $ 271,838 - (49,017) - 60,514 - 150,100) - - 1.322.700 (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2002 Note 15 — Reclassification of Beginning Fund Balance: A reclassification was made to the following beginning component unit fund balance as follows: JULY 1, 2002, BALANCE AS RESTATED Note 16 — New Reporting Standard: In June, 1999, the Governmental Accounting Standards Board (GASB) issued Statement 34 Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. This Statement establishes new financial reporting requirements for state and local governments throughout the United States. When implemented, it will require new information and restructure much of the information that governments have presented in the past. Comparability with reports issued in all prior years will be affected. The City is required to implement this standard for the fiscal year ending June 30, 2003. The effect this standard has on the City has not been fully determined. M Paducah Mainstreet Inc. June 30, 2001, balance as previously reported $ - Balance not included 3,354 JULY 1, 2002, BALANCE AS RESTATED Note 16 — New Reporting Standard: In June, 1999, the Governmental Accounting Standards Board (GASB) issued Statement 34 Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. This Statement establishes new financial reporting requirements for state and local governments throughout the United States. When implemented, it will require new information and restructure much of the information that governments have presented in the past. Comparability with reports issued in all prior years will be affected. The City is required to implement this standard for the fiscal year ending June 30, 2003. The effect this standard has on the City has not been fully determined. M REQUIRED SUPPLEMENTARY INFORMATION CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUNDS SCHEDULES Schedules of Funding Progress Actuarial Actuarial Unfunded Annual UAAL as a Actuarial Value of Accrued AAL Funded Covered Percentage of Valuation Assets Liability (AAL) (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b -a) (a/b) (c) ((b-a)/c) Police and Firefighters' Pension Fund (PFPF) (Using Entry Age Normal Method) 7/1/2000 $11,914,754 $15,923,034 $4,008,280 74.8% $345,500 1160.14% 7/1/2001 11,346,128 15,724,236 4,378,108 72.2 356,406 1228.40 7/1/2002 10,382,216 15,550,968 5,168,752 66.8 356,304 1450.66 Appointive Employees' Pension Fund (AEPF) (Using Aggregate Actuarial Method) The Aggregate Cost Method is used for the AEPF; therefore, a schedule of funding progress is not required. Schedules of Employer Contributions AEPF Annual Required PFPF Ending Year Annual Required Percent Ended Contribution ARC June 30 (ARC) Contributed 2000 $649,274 100% 2001 865,026 100 2002 806,632 100 AEPF Annual Required Percent Ending Contribution ARC Net Pension (ARC) Contributed Obligation (NPO) $66,716 112% $(182,405) 62,029 121 (182,940) 59,297 126 (186,170) Components of Annual Pension Cost (AEPF) (Continued) -61- Year Ended Year Ended Year Ended Component June 30, 2002 June 30, 2001 June 30, 2000 Beginning NPO balance $082,940) $082.405 ICLM,860 ARC 59,297 62,029 66,716 Interest on NPO (10,976) ( 10,944) ( 11,212) Unfunded ARC adjustment 23,449 23,380 23,951 Pension cost 71,770 74,465 79,455 Less actual contribution 75,000 75,000 75,000 Net change in NPO (3,230) ( 535) 4,455 ENDING NPO BALANCE SUBLIM) $082-240 KIVU& (Continued) -61- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUNDS SCHEDULES Notes to Supplementary Schedules: -62- PFPF AEPF Valuation date 7/1/02 7/1/02 Actuarial cost method Entry age normal Aggregate (1) Amortization method Level dollar closed Level dollar closed Remaining amortization period 30 Years 10 Years Asset valuation method Market value Market value Actuarial assumptions: Investment rate of return 7.75% 6.0% Projected salary increases 4.0% (2) Inflation rates adjustments 2.0% (2) (1) The Aggregate Method does not identify or separately amortize the unfunded actuarial liabilities. (2) The plan has no active participants. The pension cost for each year is determined as an amortization of the unfunded actuarial accrued liability over the lesser of 10 years or the weighted average of expected term of payment of plan benefits. -62- CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS GENERAL FUND COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 GENERAL FUND To account for resources traditionally associated with governments which are not required to be accounted for in another fund. CITY OF PADUCAH, KENTUCKY GENERAL FUND BALANCESHEET JUNE 30, 2002 ASSETS Cash Investments Receivables: Accounts Grants Interest Property taxes Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Voucher and accounts payable Accrued payroll Deferred revenues Accrued compensated absences Total liabilities Fund Balance: Fund balance: Unreserved: Undesignated TOTAL LIABILITIES AND FUND BALANCE See auditor's report on page 13. -63- Exhibit A-1 $2,279,168 2,996,685 64,531 97,255 39,001 3,746,498 258,908 $9,482,046 $ 501,531 ....509,080 3,746,773 283,000 5,040,384 4,441,662 $9,482,046 CITY OF PADUCAH, KENTUCKY GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2002 Revenues: Taxes Licenses and permits Charges for services Grants Interest Other Total revenues Expenditures: General government Public safety Public service Recreation Other Total expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -64- Exhibit A-2 $ 5,006,538 17,299,400 657,826 665,614 220,188 586,545 24,436,111 3,446,408 11,076,152 5,453,818 897,060 320,910 21,194,348 3,241,763 3,789 (3,033,267) (3,029,478) 212,285 4,229,377 $ 4,441,662 CITY OF PADUCAH, KENTUCKY GENERAL FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 WITH COMPARATIVE ACTUAL AMOUNTS FOR YEAR ENDED JUNE 30, 2001 Revenues: Taxes: Real and personal, current year Real and personal, prior year Franchise Bank taxes In lieu of tax payment Penalty, interest and advertising Total taxes Licenses: Business licenses Employee earnings Comcast fees Penalties Alcoholic beverages Insurance premium tax Building permits Electrical permits Zoning change fees Miscellaneous building and electrical fees Total licenses Charges for services: Tax collection fee Administrative charge Base court revenue Recreation fees Total charges for services See auditor's report on page 13. Variance - 2002 2002 Favorable Budget Actual (Unfavorable) $ 4,005,105 $ 4,088,805 � $ 83,700 Exhibit A-3 2001 A. +ivnl $ 3,973,898 282,950 291,515'" 8,565 157,508 253,100 259,451 6,351 257,095 184,630 184,629- (1) 175,607 134,055 134,054- (1) 136,864 48,080 48,084 " 4 35,596 4,907,920 5,006,538 98,618 4,736,568 3,248,715 3,248,714- (1) 3,201,444 9,964,960 9,873,202- (91,758) 9,603,106 264,900 264,905- 5 258,957 73,395 73,396 - 1 84,692 126,290 126,294- 4 28,178 3,620,590 3,620,594- 4 3,416,875 69,150 69,151-- 1 81,522 18,230 18,230- - 19,827 2,995 2,992 - (3) 5,267 1,925 1,922 (3) 5,162 17,391,150 17,299,400 (91,750) 16,705,030 118,520 120,637- 2,117 113,759 249,000 249,004- 4 160,084 168,750 168,752- 2 168,752 119,425 119,433- 8 135,887 655,695 657,826 2,131 578,482 -65- CITY OF PADUCAH, KENTUCKY GENERAL FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 WITH COMPARATIVE ACTUAL AMOUNTS FOR YEAR ENDED JUNE 30, 2001 Grants: Police State Incentive Fire State Incentive Paducah Housing Authority after school program Police supplemental grants FEMA funding NFL youth football Total grants Interest Other: Property rent and sales Property upkeep and maintenance Miscellaneous Total other Total revenues See auditor's report on page 13. Exhibit A-3 13,010 29,853- 9,853-104,290 Variance - 108,297 - 2002 2002 Favorable 2001 Budget Actual (Unfavorable) Actual $ 238,845 - $ 261,913- $ 23,068 $ 245,509 222,290- 265,551 - 43,261 268,622 13,010 29,853- 9,853-104,290 104,290 108,297 - 578,435 665,614 220,190 220,188 - 426,625 426,631- 86,685 86,686- 83,235 73,228 596,545 586,545 24,349,935 24,436,111 -66- 16,843 25,585 4,007 174,778 - 8,132 - 1,000 87,179 723,626 (2) 358,987 6 335,180 1 123,695 (10,007) 48,606 (10,000) 507,481 86,176 23,610,174 (Continued) Exhibit A-3 (Continued) CITY OF PADUCAH, KENTUCKY GENERAL FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 WITH COMPARATIVE ACTUAL AMOUNTS FOR YEAR ENDED JUNE 30, 2001 Finance: Finance administration 138,785 138,705 Variance - 133,757 Accounting and payroll 2002 2002 Favorable 2001 Expenditures: Budget Actual (Unfavorable) Actual General Government: 669,095 668,749 346 665,359 General Administration: 615,230 615,040 190 524,265 Mayor and commissioners $ 170,830 $ 170,493 $ 337 $ 185,127 City Manager 238,165 237,977 188 261,259 City clerk 130,440 130,372 68 136,081 Corporate counsel 225,320 225,282 38 227,593 Non -departmental 244,250 244,250 - 247,998 Memberships and contingency 27,275 27,269 6 25,285 Alcoholic beverage control - - - 3,631 Civic beautification 2,875 2,769 106 28,061 Total general administration 1,039,155 1,038,412 743 1,115,035 Finance: Finance administration 138,785 138,705 80 133,757 Accounting and payroll 275,195 275,229 (34) 272,364 Revenue collection 255,115 254,815 300 259,238 Total finance 669,095 668,749 346 665,359 Planning: Administration 198,090 198,081 9 179,727 Planning 172,415 172,359 56 140,736 Grants 95,245 95,121 124 95,690 Economic development 149,480 149,479 1 108,112 Total planning 615,230 615,040 190 524,265 Human rights 94,105 93,967 138 88,343 Personnel 202,520 202,455 65 207,988 Inspection: Inspection administration 200,815 200,657 158 206,328 Construction 213,215 213,067 148 215,902 Code enforcement 198,115 197,990 125 229,124 Total inspection 612,145 611,714 431 651,354 Information systems 216,030 216,071 (41) 133,986 See auditor's report on page 13. -67- CITY OF PADUCAH, KENTUCKY GENERAL FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 WITH COMPARATIVE ACTUAL AMOUNTS FOR YEAR ENDED JUNE 30, 2001 Public Safety: Police: Police administration Patrol Investigations Crime prevention/media relations Total police Fire: Fire administration Suppression Prevention Training Total fire Public Service: Public works: Public Works Administration Street maintenance Street lighting Facility maintenance Custodial service Landscape maintenance Summer youth program Total public works Engineering services: Engineering services Flood control Total engineering services See auditor's report on page 13. Variance - 2002 2002 Favorable Budget Actual (Unfavorable) $ 1,062,345 $ 1,062,100 3,967,385 3,967,210 1,095,830 1,095,436 6,125,560 6,124,746 205,630 205,605 4,479,530 4,479,488 155,945 155,804 110,600 110,509 4,951,705 4,951,406 173,425 173,380 2,015,705 2,015,296 407,735 407,730 525,090 524,644 202,795 202,602 1,243,160 1,242,754 92,095 92,061 4,660,005 4,658,467 407,460 407,170 388,640 388,181 796,100 795,351 -68- Exhibit A-3 2001 $ 245 $ 805,233 175 3,649,664 394 974,708 - 282,961 814 5,712,566 25 42 141 91 299 45 409 5 446 193 406 34 1,538 290 459 749 194,119 4,355,093 155,298 112,936 4,817,446 53,991 1,874,491 398,631 490,046 191,916 1,041,707 90,035 4,140,817 390,891 340,879 731,770 (Continued) CITY OF PADUCAH, KENTUCKY GENERAL FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 WITH COMPARATIVE ACTUAL AMOUNTS FOR YEAR ENDED JUNE 30, 2001 Recreation: Recreation administration Pools and recreation Total parks Other: Cable authority Grant match expense Leave expense Total other Total expenditures Excess of revenues over expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, beginning of year, as previously reported FUND BALANCE, END OF YEAR See auditor's report on page 13. Exhibit A-3 (Continued) -69- Variance - 2002 2002 Favorable 2001 Budget Actual (Unfavorable) Actual $ 475,190 $ 474,941 $ 249 $ 362,239 423,325 422,119 1,206 376,162 898,515 897,060 1,455 738,401 52,200 52,085 115 99,657 222,385 222,382 3 - 46,445 46,443 2 - 321,030 320,910 120 99,657 21,201,195 21,194,348 6,847 19,626,987 3,148,740 3,241,763 93,023 3,983,187 3,785 3,789 4 591,720 (3,265,135) (3,033,267) 231,868 (4,276,337) (3,261,350) (3,029,478) 231,872 (3,684,617) $ (112,610) 212,285 $324,895 298,570 4,229,377 3,930,807 $ 4,441,662 $ 4,229,377 -69- CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS SPECIAL REVENUE .FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 SPECIAL REVENUE FUNDS Municipal Aid Program - to account for revenues and expenditures of Kentucky gas tax refunds. Emergency Communication Service Fund - to account for revenues associated with 911 program. Court Awards Fund - to account for revenues associated with judicial system confiscations. Federal, State, and Local Grants - to account for the grant programs awarded to the City of Paducah from agencies of the Federal Government and the Commonwealth of Kentucky. Exhibit B-1 CITY OF PADUCAH, KENTUCKY SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET NNE 30, 2002 Fund Equity: Fund balance: Reserved for program purposes Unreserved: Designated for street improvement Undesignated Total fund equity TOTAL LIABILITIES AND FUND BALANCES See auditor's report on page 13. 567,096 567,096 327,944 - - - 327,944 - 337,351 49,677 - 387,028 327,944 337,351 49,677 567,096 1,282,068 $510,324 $373,777 -70- $124,174 $867,626 $1,875,901 Emergency Court Federal, ASSETS Municipal Communication Awards State, and Combined Aid Program Service Fund Fund Local Grants Total Cash $ - $295,067 $124,174 $814,547 $1,233,788 Investments 508,903 - - 508,903 Receivables: Accounts - 78,710 - - 78,710 Grants - - - 53,079 53,079 Interest 1,421 - - - 1,421 TOTAL ASSETS $510,324 $373,777 $124,174 $867,626 $1,875,901 LIABILITIES AND FUND EQUITY Liabilities: Voucher and accounts payable $162,422 $ 13,800 $ 74,497 $ 45,076 $ 295,795 Accrued payroll and payroll taxes - 22,841 - 10,810 33,651 Due to other funds 19,958 - - 50,520 70,478 Deferred revenues - (215) - 194,124 193,909 Total liabilities 182,380 36,426 74,497 300,530 593,833 Fund Equity: Fund balance: Reserved for program purposes Unreserved: Designated for street improvement Undesignated Total fund equity TOTAL LIABILITIES AND FUND BALANCES See auditor's report on page 13. 567,096 567,096 327,944 - - - 327,944 - 337,351 49,677 - 387,028 327,944 337,351 49,677 567,096 1,282,068 $510,324 $373,777 -70- $124,174 $867,626 $1,875,901 Exhibit B-2 CITY OF PADUCAH, KENTUCKY SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2002 See auditor's report on page 13. -71- Emergency Court Federal, Municipal Communication Awards State, and Combined Revenues: Aid Program Service Fund Fund Local Grants Total Charges for services $ - $ 794,906 $ - $ - $ 794,906 Intergovernmental 399,977 - - - 399,977 Grants - - - 2,332,410 2,332,410 Interest 36,712 1,521 2,735 5,122 46,090 Other 20,970 206,552 18,534 11,468 257,524 Total revenues 457,659 1,002,979 21,269 2,349,000 3,830,907 Expenditures: Current: Public safety - 1,033,005 31,768 152,556 1,217,329 Public services 1,709,969 - - - 1,709,969 Planning and development - - - 2,231,628 2,231,628 Total expenditures 1,709,969 1,033,005 31,768 2,384,184 5,158,926 Excess of revenues over (under) expenditures (1,252,310) (30,026) (10,499) (35,184) (1,328,019) Other Financing Sources (Uses): Operating transfers in 500,000 263,977 - 72,276 836,253 Operating transfers out - - (3,789) (25,000) (28,789) Total other financing sources (uses) 500,000 263,977 (3,789) 47,276 807,464 Excess of revenues and other financing sources over (under) expenditures and other uses (752,310) 233,951 (14,288) 12,092 (520,555) Fund balances, July 1, 2001, as previously reported 1,080,254 103,400 63,965 604,021 1,851,640 Adjustment to beginning fund balance - - - (49,017) (49,017) FUND BALANCES, JUNE 30, 2002 $ 327,944 $ 337,351 $49,677 $ 567,096 $1,282,068 See auditor's report on page 13. -71- Exhibit B-3 CITY OF PADUCAH, KENTUCKY FEDERAL, STATE, AND LOCAL GRANTS COMBINING BALANCE SHEET JUNE 30, 2002 LIABILITIES AND FUND E Voucher and accounts payable $ - $ 3,500 $ - $ 765 $ 16,416 Accrued payroll and payroll taxes - - - - - Due to other funds 10,724 - - - Deferred revenues 86,118 50,000 - 58,006 - Total liabilities 96,842 53,500 - 58,771 16,416 Fund balance reserved for program purposes - - 179,509 - 132,463 TOTAL LIABILITIES AND FUND BALANCES $96,842 $53,500 $179,509 $58,771 $148,879 See auditor's report on page 13. -72- Small HOPE 3 Home HUD ASSETS Grant CDBG Grant Grant Revolving Fund Fund Fund Fund Grant Fund Cash $96,842 $43,000 $179,509 $51,789 $148,879 Receivables: Grants - 10,500 - 6,982 - TOTAL ASSETS $96,842 $53,500 $179,509 $58,771 $148,879 LIABILITIES AND FUND E Voucher and accounts payable $ - $ 3,500 $ - $ 765 $ 16,416 Accrued payroll and payroll taxes - - - - - Due to other funds 10,724 - - - Deferred revenues 86,118 50,000 - 58,006 - Total liabilities 96,842 53,500 - 58,771 16,416 Fund balance reserved for program purposes - - 179,509 - 132,463 TOTAL LIABILITIES AND FUND BALANCES $96,842 $53,500 $179,509 $58,771 $148,879 See auditor's report on page 13. -72- PHA Section - 10,810 Police Eight Combined Grant Fund Housing Total $ - $294,528 $814,547 10,352 25,245 53,079 $10,352 $319,773 $867,626 $ - $ 24,395 $ 45,076 - 10,810 10,810 10,352 29,444 50,520 - - 194,124 10,352 64,649 300,530 - 255,124 567,096 $10,352 $319,773 $867,626 -73- CITY OF PADUCAH, KENTUCKY FEDERAL, STATE, AND LOCAL GRANTS COMBR41NG STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2002 Revenues: Grants Interest Other Total revenues Expenditures: Public safety Planning and development Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balances, July 1, 2001, as previously reported Adjustment to beginning fund balance FUND BALANCES, JUNE 30, 2002 See auditor's report on page 13. Exhibit B-4 Small HOPE 3 Home HUD Grant CDBG Grant Grant Revolving Fund Grant Fund Fund Grant Fund $28,734 $98,994 $ - $426,861 $ 50,000 - - - - 3,562 - - 3,164 - 8,304 28,734 98,994 3,164 426,861 61,866 58,010 98,994 - 426,861 103,241 58,010 98,994 - 426,861 103,241 (29,276) - 3,164 - (41,375) 29,276 - - - 43,000 - - - - (25,000) 29,276 - - - 18,000 -74- 3,164 - (23,375) 176,345 - 155,838 $179,509 $ - $132,463 PHA Police Grant Fund $152,556 152,556 152,556 152,556 Section Eight Housing $1,575,265 1,560 1,576,825 Combined T_a_l 5,122 11,468 2,349,000 - 152,556 1,544,522 2,231,628 1,544,522 2,384,184 32,303 (35,184) 72,276 (25,000) - 47,276 32,303 12,092 271,838 604,021 (49,017) (49,017) $ - $ 255,124 $ 567,096 -75- CITY OF PADUCAH, KENTUCKY BUDGETED SPECIAL REVENUE FUNDS TOTALS DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Charges for services Intergovernmental Grants Interest Other Total revenues Expenditures: Public safety Public services Planning and development Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -76- Budget $ 797,950 399,975 849,960 44,525 257,460 Actual $ 794,906 399,977 757,145 44,530 257,524 Exhibit B-5 Variance - Favorable (Unfavorable) $ (3,044) 2 (92,815) 5 64 2,349,870 2,254,082 (95,788) (35,860) 1,217,375 1,217,329 46 1,710,020 1,709,969 51 646,170 687,106 (40,936) 3,573,565 3,614,404 (40,839) (1,223,695) (1,360,322) (136,627) 931,775 836,253 (95,522) (35,860) (28,789) 7,071 895,915 807,464 (88,451) $ (327,780) (552,858) $ (225,078) 1,579,802 $1,026,944 CITY OF PADUCAH, KENTUCKY MUNICIPAL AID PROGRAM FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Intergovernmental Interest Other Total revenues Expenditures: Public services Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -77- Budget Actual $ 399,975 $ 399,977- 36,710 36,712 20,970 20,970 457,655 457,659 1,710,020 1,709,969 (1,252,365) (1,252,310) 500,000 500,000 $ (752,365) (752,310) 1,080,254 $ 327,944 Exhibit B-6 Variance - Favorable (Unfavorable) $ 2 2 4 51 55 $ 55 CITY OF PADUCAH, KENTUCKY EMERGENCY COMMUNICATION SERVICE FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Local contributions Telephone surcharges Interest Total revenues Expenditures: Public safety Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -78- Exhibit B-7 1,033,040 1,033,005 (27,070) (30,026) 263,975 263,977 $ 236,905 233,951 103,400 $ 337,351 35 (2,956) 2 $ (2,954) Variance - Favorable Budget Actual (Unfavorable) $ 206,500 $ 206,552 $ 52 797,950 794,906 (3,044) 1,520 1,521 1 1,005,970 1,002,979 (2,991) 1,033,040 1,033,005 (27,070) (30,026) 263,975 263,977 $ 236,905 233,951 103,400 $ 337,351 35 (2,956) 2 $ (2,954) CITY OF PADUCAH, KENTUCKY COURT AWARDS FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Court awarded forfeitures Interest Total revenues Expenditures: Public safety Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers out Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -79- Exhibit B-8 $(14,300) (14,288) $ 12 63,965 $ 49,677 Variance - Favorable Budget Actual (Unfavorable) $ 18,530 $ 18,534 $ 4 2,735 2,735 - 21,265 21,269 4 31,775 31,768 7 (10,510) (10,499) 11 (3,790) (3,789) 1 $(14,300) (14,288) $ 12 63,965 $ 49,677 CITY OF PADUCAH, KENTUCKY SMALL GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Grants Expenditures: Planning and development Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -80- Exhibit B-9 Variance - Favorable Budget Actual (Unfavorable) $114,845 $28,734 $(86,111) 58,010 58,010 - 56,835 (29,276) (86,111) 40,000 29,276 (10,724) $ 96,835 - $(96,835) CITY OF PADUCAH, KENTUCKY CDBG FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Grants Expenditures: Planning and development Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -81- Exhibit B-10 Variance - Favorable Budget Actual (Unfavorable) $88,495 $98,994 $ 10,499 64,130 98,994 (34,864) 24,365 - (24,365) 50,000 - (50,000) $74,365 - $(74,365) Exhibit B-11 CITY OF PADUCAH, KENTUCKY HOPE 3 IMPLEMENTATION GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -82- $179,509 Variance - Favorable Revenues: Budget Actual (Unfavorable) Other $3,160 $ 3,164. $ 4 Excess of revenues over (under) expenditures $3,160 3,164 $ 4 Fund balance, July 1, 2001 176,345 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -82- $179,509 CITY OF PADUCAH, KENTUCKY HOME GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Grants Expenditures: Planning and development Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -83- Exhibit B-12 Variance - Favorable Budget Actual (Unfavorable) $444,070 $426,861 $(17,209) 420,785 426,861 (6,076) 23,285 - (23,285) 34,800 - (3,535) - 31,265 - $ 54,550 - (34,800) 3,535 (31,265) $(54,550) CITY OF PADUCAH, KENTUCKY HUD REVOLVING GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Grants Interest Other Total revenues Expenditures: Planning and development Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -84- Exhibit B-13 $ (26,920) (23,375) $3,545 155,838 $132,463 Variance - Favorable Budget Actual (Unfavorable) $ 50,000 $ 50,000 - 3,560 3,562 2 8,300 8,304 4 61,860 61,866 6 103,245 103,241 4- (41,385) (41,375) 10 43,000 43,000 - (28,535) (25,000) 3,535 14,465 18,000 3,535 $ (26,920) (23,375) $3,545 155,838 $132,463 CITY OF PADUCAH, KENTUCKY PADUCAH HOUSING AUTHORITY POLICE GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Grants Expenditures: Public safety Excess of revenues over (under) expenditures Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -85- Budget Actual $152,550 $152,556 152,560 152,556 $ (10) Exhibit B-14 Variance - Favorable (Unfavorable) $ 6 4 $10- CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS DEBT SERVICE FUND COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 DEBT SERVICE FUND To account for the payment of public project bond principal and interest, public improvement loan principal and interest, and capital lease payments. CITY OF PADUCAH, KENTUCKY DEBT SERVICE FUND BALANCE SHEET JUNE 30, 2002 Cash Notes receivable TOTAL ASSETS Liabilities: Deferred revenues Matured interest coupons unpaid Total liabilities Fund Equity: Fund balance: Unreserved: Designated for debt service TOTAL LIABILITIES AND EQUITY See auditor's report on page 13. ASSETS LIABILITIES AND FUND EQUITY -86- Exhibit C-1 $ 45,684 200,667 $246,351 $ 1,283 344 1,627 244,724 $246,351 CITY OF PADUCAH, KENTUCKY DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2002 Revenues: Taxes Intergovernmental Total revenues Expenditures: Debt service: Principal requirement Interest and fiscal requirement Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -87- Exhibit C-2 $ 371,327 161,021 532,348 362,275 413,364 775,639 (243,291) 255,375 12,084 232,640 $ 244,724 CITY OF PADUCAH, KENTUCKY DEBT SERVICE FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Taxes Intergovernmental Total revenues Expenditures: Debt service: Principal requirement Interest and fiscal requirement Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -88- Exhibit C-3 362,275 362,275 - Variance - 413,364 96 775,735 Favorable Budget Actual (Unfavorable) $ 371,325 $371,327 $ 2 161,020 161,021 1 532,345 532,348 3 362,275 362,275 - 413,460 413,364 96 775,735 775,639 96 (243,390) (243,291) 99 255,375 255,375 - $ 11,985 12,084 $ 99 232,640 $ 244,724 CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS CAPITAL PROJECTS FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2002 CAPITAL PROJECT FUNDS General Capital Improvements — to account for the acquisition or construction of major capital projects other than those financed by proprietary fund operations and special assessments. Downtown Capital Improvements — to account for the acquisition or construction of major capital facilities related to the development of downtown Paducah. CITY OF PADUCAH, KENTUCKY CAPITAL PROJECT FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 ASSETS Cash Investments Interest receivable TOTAL ASSETS LIABILITIES AND FUND EQUITY Liabilities: Voucher and accounts payable Due to other funds Deferred revenue Total liabilities Fund Equity: Fund balance: Reserved for future capital improvements TOTAL LIABILITIES AND FUND EQUITY See auditor's report on page 13. -89- General Capital Improvements $1,162,067 101,781 1,149 $1,264,997 $ 21,126 4,000 358,928 384,054 880,943 $1,264,997 Exhibit D-1 Downtown Capital Combined Improvements Total $ 284,675 $1,446,742 3,133,300 3,235,081 323 1,472 $3,418,298 $4,683,295 $ 87,523 87,523 3,330,775 $3,418,298 $ 108,649 4,000 358,928 471,577 4,211,718 $4,683,295 Exhibit D-2 CITY OF PADUCAH, KENTUCKY CAPITAL PROJECT FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2002 Expenditures: Other General Downtown 2,934 Capital outlay Capital Capital Combined Revenues: Improvements Improvements Total Intergovernmental $ 29,374 $ - $ 29,374 Grants 742,221 250,000 992,221 Interest 18,822 256,177 274,999 Other 112,544 7,343 119,887 Total revenues 902,961 513,520 1,416,481 Expenditures: Other 2,934 - 2,934 Capital outlay 1,644,315 5,934,864 7,579,179 Total expenditures 1,647,249 5,934,864 7,582,113 Excess of revenues over (under) expenditures (744,288) (5,421,344) (6,165,632) Other Financing Sources (Uses): Operating transfers in 693,045 - 693,045 Excess of revenues and other financing sources over (under) expenditures and other uses (51,243) (5,421,344) (5,472,587) Fund balances, July 1, 2001 1,082,286 8,752,119 9,834,405 Adjustment to beginning fund balance (150,100) - (150,100) FUND BALANCES, JUNE 30, 2002 $ 880,943 $3,330,775 $4,211,718 See auditor's report on page 13. -90- CITY OF PADUCAH, KENTUCKY CAPITAL PROJECT FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Revenues: Intergovernmental Grants Interest Other Total revenues Expenditures: Other Capital outlay Total expenditures Excess of revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in Excess of revenues and other financing sources over (under) expenditures and other uses Fund balances, July 1, 2001 Adjustment to beginning fund balance FUND BALANCES, JUNE 30, 2002 See auditor's report on page 13. -91- Exhibit D-3 General Capital Improvements 2,935 2,934 1 1,669,705 1,644,315 25,390 1,672,640 1,647,249 25,391 (870,375) (744,288) 126,087 830,620 693,045 (137,575) $ (39,755) (51,243) $ (11,488) 1,082,286 (150,100) $ 880,943 Variance - Favorable Budget Actual (Unfavorable) $ 29,370 29,374 4 641,535 742,221 100,686 18,820 18,822 2 112,540 112,544 4 802,265 902,961 100,696 2,935 2,934 1 1,669,705 1,644,315 25,390 1,672,640 1,647,249 25,391 (870,375) (744,288) 126,087 830,620 693,045 (137,575) $ (39,755) (51,243) $ (11,488) 1,082,286 (150,100) $ 880,943 Downtown Capital Improvements Totals Variance - Favorable Budget Actual (Unfavorable) $ 29,370 $ 29,374 $ 4 250,000 250,000 - 256,170 256,177 7 7,340 7,343 3 513,510 513,520 10 Totals 1,315,775 1,416,481 100,706 - - - 2,935 2,934 1 5,852,675 5,934,864 (82,189) 7,522,380 7,579,179 (56,799) 5,852,675 5,934,864 (82,189) 7,525,315 7,582,113 (56,798) (5,339,165) (5,421,344) $(5,339,165) (5,421,344) 8,752,119 $ 3,330,775 (82,179) (6,209,540) (6,165,632) 43,908 830,620 693,045 (137,575) $ (82,179) $(5,378,920) (5,472,587) $ (93,667) 9,834,405 (150,100) $ 4,211,718 -92- Variance - Favorable Budget Actual (Unfavorable) $ 29,370 $ 29,374 $ 4 891,535 992,221 100,686 274,990 274,999 9 119,880 119,887 7 1,315,775 1,416,481 100,706 - - - 2,935 2,934 1 5,852,675 5,934,864 (82,189) 7,522,380 7,579,179 (56,799) 5,852,675 5,934,864 (82,189) 7,525,315 7,582,113 (56,798) (5,339,165) (5,421,344) $(5,339,165) (5,421,344) 8,752,119 $ 3,330,775 (82,179) (6,209,540) (6,165,632) 43,908 830,620 693,045 (137,575) $ (82,179) $(5,378,920) (5,472,587) $ (93,667) 9,834,405 (150,100) $ 4,211,718 -92- CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS ENTERPRISE FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 ENTERPRISE FUNDS Solid Waste Fund — to account for the provision of refuse services to the residents of the City. Wastewater/Stormwater Fund — to account for the remaining assets and liabilities of wastewater/stormwater operations not yet transferred to the Joint Sewer Agency. Civic Center Fund — to account for the operation of the Civic Center. TISA Fund — to account for revenues and expenses associated with the operation of the Paducah - McCracken County telecommunications and information systems. Exhibit E-1 CITY OF PADUCAH, KENTUCKY ENTERPRISE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 ASSETS Solid Wastewater/ Civic - 162,000 208,861 Waste Stormwater Center TISA Combined Current Assets: Fund Fund Fund Fund Total Cash and cash equivalents $1,371,839 $188,813 $ 24,970 $ 13,831 $1,599,453 Investments 407,123 - - - 407,123 Interest receivable 2,328 - - - 2,328 Inventory 359 - - - 359 Total current assets 1,781,649 188,813 24,970 13,831 2,009,263 Property and Equipment: Land 65,908 - 65,908 Buildings 40,658 - 284,224 - 324,882 Machinery and equipment 3,426,483 - 17,491 349,441 3,793,415 Less accumulated depreciation (2,421,274) - (131,202) (120,752) (2,673,228) Total property and equipment 1,111,775 - 170;513 228,689 1,510,977 TOTAL ASSETS $2,893,424 $188,813 $195,483 $242,520 $3,520,240 LIABILITIES AND FUND EOUITY Current Liabilities: Voucher and accounts payable $ 191,738 $188,813 Accrued payroll and payroll taxes 16,577 - Current maturities of long-term debt 42,000 - Total current liabilities Long -Term Debt: Accrued compensation absences Fund Equity: Contributed capital Retained earnings - unreserved Total fund equity TOTAL LIABILITIES AND FUND EQUITY See auditor's report on page 13. 250,315 188,813 17,696 2,625,413 2,625,413 $2,893,424 $ 1,160 $ 3,384 $ 385,095 - - 16,577 - - 42,000 1,160 3,384 443,672 - - - 17,696 - 162,000 208,861 370,861 - 32,323 30,275 2,688,011 - 194,323 239,136 3,058,872 $188,813 $195,483 $242,520 $3,520,240 -93- Exhibit E-2 CITY OF PADUCAH, KENTUCKY ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED JUNE 30, 2002 See auditor's report on page 13. -94- Solid Wastewater/ Civic Waste Stormwater Center TISA Combined Operating Revenues: Fund Fund Fund Fund Total Charges for services $3,244,242 $ - $ 19,392 $ 69,659 $3,333,293 Other 1,157 - - 1,141 2,298 Total operating revenues 3,245,399 - 19,392 70,800 3,335,591 Operating Expenses: Cost of sales and service 2,871,940 - 30,144 61,900 2,963,984 Depreciation and amortization 330,345 - 9,105 48,711 388,161 Total operating expenses 3,202,285 - 39,249 110,611 3,352,145 Operating income (loss) 43,114 - (19,857) (39,811) (16,554) Nonoperating Revenues (Expenses): Investment income 50,890 - 514 - 51,404 Gain (loss) on disposal of property - 35,753 and equipment 35,753 - - Total nonoperating revenues (expenses) 86,643 - 514 - 87,157 Income (loss) before operating transfers 129,757 - (19,343) (39,811) 70,603 Operating Transfers In (Out): - - 10,000 - 10,000 Operating transfers in Net income (loss) 129,757 - (9,343) (39,811) 80,603 Add: Depreciation on property and equipment funded by contributed capital - - 5,400 48,027 53,427 Retained earnings, July 1, 2001 2,495,656 - 36,266 22,059 2,553,981 RETAINED EARNINGS, JUNE 30, 2002 $2,625,413 $ - $ 32,323 $ 30,275 $2,688,011 See auditor's report on page 13. -94- CITY OF PADUCAH, KENTUCKY ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2002 Cash Flows From Operating Activities: Operating income (loss) Adjustments to reconciled operating income (loss) to net cash provided by operating activities: Depreciation and amortization (Increase) decrease in: Receivables Increase (decrease) in: Accounts payable and accrued expenses Net cash provided (used) by operating activities Cash Flows from Noncapital Financing Activities: Operating transfers in Net cash provided (used) by capital and related financing activities Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets Proceeds from sale of capital assets Net cash provided (used) by capital and related financing activities Exhibit E-3 Solid Wastewater/ Civic Waste Stormwater Center TISA Combined Fund Fund Fund Fund Total $ 43,114 $ - $(19,857) $(39,811) $ 330,345 - 9,105 48,711 388,161 208,052 - - 34,697 242,749 56,103 4,225 (2,664) (21,794) 35,870 637,614 4,225 (13,416) 21,803 650,226 10,000 - 10,000 10,000 - 10,000 (365,514) - - (20,512) (386,026) 393 - - - 393 (365,121) - - (20,512) (385,633) Cash Flows from Investing Activities: Proceeds from sale of investment securities 528,237 - - - 528,237 Interest on cash and investments 50,890 - 514 - 51,404 Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2001 CASH AND CASH EQUIVALENTS, JUNE 30, 2002 See auditor's report on page 13. 579,127 - 514 - 579,641 851,620 4,225 (2,902) 1,291 854,234 520,219 184,588 27,872 12,540 745,219 $1,371,839 $188,813 -95- $ 24,970 $ 13,831 $1,599,453 CITY OF PADUCAH, KENTUCKY SOLID WASTE FUND SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Other Total operating revenues Exhibit E-4 Variance - Favorable Budget Actual (Unfavorable) $3,244,240 $3,244,242 $ 2 1,155 1,157 2 $3,245,395 $3,245,399 $ 4 Operating Expenses: Solid waste administration $ 209,170 $ 209,075 $ 95 Residential collection 1,039,875 1,039,853 22 Commercial collection 1,034,625 1,036,366 (1,741) Composting and recycling 145,170 145,097 73 Bulk, brush and leaf 435,280 435,252 28 Leave expense 48,300 6,297 42,003 Depreciation 382,000 330,345 51,655 Total operating expenses $3,294,420 $3,202,285 $92,135 See auditor's report on page 13. -96- CITY OF PADUCAH, KENTUCKY CIVIC CENTER FUND SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Operating Expenses: Civic Center operations Depreciation Total operating expenses See auditor's report on page 13. -97- Budget Actual $19,390 $19,392 $30,170 $30,144 11,000 9,105 $41,170 $39,249 Exhibit E-5 Variance - Favorable (Unfavorable) $ 2 $ 26 1,895 $1,921 CITY OF PADUCAH, KENTUCKY TISA FUND SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Other Total operating revenues Operating Expenses: Cost of service Depreciation Total operating expenses See auditor's report on page 13. -98- Exhibit E-6 Variance - Favorable Budget Actual (Unfavorable) $ 69,660 $ 69,659 $ (1) 1,140 1,141 1 $ 70,800 $ 70,800 $ - $ 61,915 $ 61,900 $ 15 48,720 48,711 9 $110,635 $110,611 $ 24 CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 INTERNAL SERVICE FUNDS Fleet Maintenance - to account for costs of operating a maintenance facility for automotive equipment used by other City departments. Fleet Lease Trust - to account for the financing of vehicle acquisitions provided by one department or agency to other departments or agencies of the government and to other governmental units, on a cost reimbursement basis. Insurance Fund - to account for the costs of obtaining insurance for other City departments. Health Insurance Fund - to account for the costs associated with the City's health insurance activities. The intent of the City of Paducah is that the cost of providing insurance coverages on a continuing basis be financed primarily through user charges. Exhibit F-1 CITY OF PADUCAH, KENTUCKY INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 ASSETS - - - 20,000 212,330 Health - 2,323,175 (177,571) Fleet Fleet Lease Insurance Insurance Combined Current Assets: Maintenance Trust Fund Fund Total Cash and cash equivalents $ 300 $ 549,955 $109,411 $ 41,402 $ 701,068 Investments - 229,781 - - 229,781 Accounts receivable - - - 139,924 139,924 Interest receivable - 4,275 - - 4,275 Inventory 125,408 - - - 125,408 Total current assets 125,708 784,011 109,411 181,326 1,200,456 Property and Equipment: Buildings Machinery and equipment Less accumulated depreciation Total property and equipment TOTAL ASSETS LIABILITIES AND FUND EQUITY Current Liabilities: Voucher and accounts payable Accrued payroll and payroll taxes Current maturities of long-term debt Due to other funds Total current liabilities Long -Term Debt: Accrued compensated absences Fund Equity: Contributed capital Retained earnings - unreserved Total fund equity TOTAL LIABILITIES AND FUND EQUITY See auditor's report on page 13. 20,000 - - - 20,000 212,330 2,110,845 - - 2,323,175 (177,571) (741,563) - - (919,134) 54,759 1,369,282 - - 1,424,041 $ 180,467 $2,153,293 $109,411 $181,326 $2,624,497 $ 12,885 5,688 - 20,000 - 38,573 - $287,669 $ 300,554 - 5,688 - 20,000 83,712 83,712 371,381 409,954 30,858 - - - 30,858 - 260,495 - - 260,495 111,036 1,892,798 109,411 (190,055) 1,923,190 111,036 2,153,293 109,411 (190,055) 2,183,685 $ 180,467 $2,153,293 $109,411 $181,326 $2,624,497 Exhibit F-2 CITY OF PADUCAH, KENTUCKY INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED JUNE 30, 2002 Health Fleet Fleet Lease Insurance Insurance Combined Operating Revenues: Maintenance Trust Fund Fund Total Charges for services $ 265,706 $ 303,247 $891,275 $2,795,268 $4,255,496 Operating Expenses: Vehicle maintenance Administrative Insurance Leave expense Depreciation Total operating expenses Operating income (loss) Nonoperating Revenues (Expenses): Investment income Gain (loss) on disposal of property and equipment Total nonoperating revenues (expenses) Income (loss) before operating transfers Operating Transfers In (Out): Operating transfers in Net income (loss) Retained earnings (deficit), July 1, 2001 Adjustment to beginning retained earnings RETAINED EARNINGS (DEFICIT), JUNE 30, 2002 See auditor's report on page 13. 400,247 - - - 400,247 - 1,100 - 850 1,950 - - 802,341 2,864,709 3,667,050 3,328 - - - 3,328 13,840 229,420 - - 243,260 417,415 230,520 802,341 2,865,559 4,315,835 (151,709) 72,727 88,934 (70,291) (60,339) 12,727 - - 12,727 17,213 - - 17,213 29,940 - (151,709) 102,667 88,934 123,887 467,431 - (27,822) 570,098 88,934 138,858 1,262,186 20,477 29,940 (70,291) (30,399) 591,318 (70,291) 560,919 (119,764) 1,301,757 60,514 - - 60,514 $111,036 $1,892,798 $109,411 $ (190,055) $1,923,190 -100- Exhibit F-3 CITY OF PADUCAH, KENTUCKY INTERNAL SERVICE FUNDS COMBR41NG STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2002 See auditor's report on page 13. -101- Health Fleet Fleet Lease Insurance Insurance Combined Cash Flows from Operating Activities: Maintenance Trust Fund Fund Total Operating income (loss) $ (151,709) $ 72,727 $ 88,934 $(70,291) $ (60,339) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 13,840 229,420 - - 243,260 (Increase) decrease in: Receivables - 1,213 - 38,440 39,653 Inventories 7,870 - - - 7,870 Increase (decrease) in: Accounts payable and accrued expenses 9,453 - (15,016) 73,253 67,690 Net cash provided (used) by operating activities (120,546) 303,360 73,918 41,402 298,134 Cash Flows from Noncapital Financing Activities: Operating transfers in 123,887 467,431 - - 591,318 Cash Flows from Capital and Related Financing Activities: Acquisition of capital assets (3,350) (467,431) (470,781) Proceeds from the sale of capital assets - 17,213 - - 17,213 Net cash provided (used) by capital and related financing activities (3,350) (450,218) - - (453,568) Cash Flows from Investing Activities: Procees from sale of investment securities - 33,986 - - 33,986 Interest on cash and investments - 12,727 - - 12,727 Net cash provided (used) by investing activities - 46,713 - - 46,713 Net increase (decrease) in cash and cash equivalents (9) 367,286 73,918 41,402 482,597 Cash and cash equivalents, July 1, 2001 309 182,669 35,493 - 218,471 CASH AND CASH EQUIVALENTS, JUNE 30, 2002 $ 300 $549,955 $109,411 $ 41,402 $701,068 See auditor's report on page 13. -101- Exhibit F-4 CITY OF PADUCAH, KENTUCKY FLEET MAINTENANCE SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Variance - Favorable Operating Revenues: Budget Actual (Unfavorable) Charges for services $265,700 $265,706 $ 6 Operating Expenses: Vehicle maintenance $401,175 $400,247 $ 928 Leave expense 18,330 3,328 15,002 Depreciation 11,000 13,840 (2,840) Total operating expenses $430,505 $417,415 $13,090 See auditor's report on page 13. -102- CITY OF PADUCAH, KENTUCKY FLEET LEASE TRUST SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Operating Expenses: Administrative Depreciation Total operating expenses See auditor's report on page 13. -103- Budget Actual $303,245 $303,247 $ 1,100 $ 1,100 229,420 229,420 $230,520 $230,520 Exhibit F-5 Variance - Favorable (Unfavorable) $ 2 CITY OF PADUCAH, KENTUCKY INSURANCE FUND SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Operating Expenses: Insurance expense See auditor's report on page 13. -104- Exhibit F-6 Variance - Favorable Budget Actual (Unfavorable) $891,275 $891,275 $ - $802,510 $802,341 $ 169 CITY OF PADUCAH, KENTUCKY HEALTH INSURANCE FUND SCHEDULE OF OPERATING REVENUES AND EXPENSES BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2002 Operating Revenues: Charges for services Operating Expenses: Administration Insurance expense Total operating expenses See auditor's report on page 13. -105- Budget Actual $2,753,865 $2,795,268 $ 850 $ 850 2,864,715 2,864,709 $2,865,565 $2,865,559 Exhibit F-7 Variance - Favorable (Unfavorable) $41,403 M 6 $ 6 CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS TRUST AND AGENCY FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2002 TRUST AND AGENCY FUNDS Police and Firefighters' Retirement Fund and Appointive Employees' Pension Fund — to account for the accumulation of resources to be used for retirement payments at appropriate amounts and times in the future. Resources are contributed by employees and by the City at amounts determined by Kentucky Statutes and/or City Commission decisions. Oak Grove Cemetery Trust and Rinkleff Estate — to account for assets held by the City in the capacity of trustee for specified purposes. Property Tax Agency Fund — to account for the collection and distribution of property tax resources received by the City of Paducah for the General Fund, special voted funds and other governmental agencies for which the City acts as collection agent. Payroll Agency Fund — to account for disbursements relative to the City payroll. The various City departments transfer amounts to this fund to cover routine payroll and the related benefits and taxes. All payroll disbursements are made from this fund. CITY OF PADUCAH, KENTUCKY TRUST AND AGENCY FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 ASSETS Cash and cash equivalents Investments Receivables: Interest Property taxes (net of allowances for uncollectibles) Due from other taxing agencies Other TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities: Voucher and accounts payable Payroll taxes and withholdings payable Due to other funds Due to other taxing agencies Total liabilities Fund Balances: Reserved for employees' pension benefits Reserved for trust purpose Undesignated Total fund balances TOTAL LIABILITIES AND FUND BALANCES See auditor's report on page 13. -106- Exhibit G-1 Pension Trust Police Appointive and Firefighters' Employees' Retirement Fund Pension Fund $ 321,919 $344,265 9,973,400 - 81,285 - 5,980 150 $10,382,584 $344,415 $ 367 $ 142 367 142 10,382,217 344,273 10,382,217 344,273 $10,382,584 $344,415 Nonexpendable Expendable Trust Trust Agency Oak Grove 6,130 Cemetery Rinkleff Trust Estate Total $ 1,017 $13,648 $255,382 68,056 - - $69,073 69,073 69,073 $69,073 Combined 10,041,456 81,285 - 188,841 188,841 - 2,114 2,114 - - 6,130 $13,648 $446,337 $11,256,057 $ - $ - $ 509 - 255,382 255,382 - 100,718 100,718 - 90,237 90,237 - 446,337 446,846 - IV,, 1W,T7V - - 69,073 13,648 - 13,648 13,648 - 10,809,211 $13,648 $446,337 $11,256,057 -107- Exhibit G-2 CITY OF PADUCAH, KENTUCKY PENSION TRUST FUNDS COMBINING STATEMENT OF CHANGES IN PLAN NET ASSETS YEAR ENDED JUNE 30, 2002 Deductions: Benefits Police and Appointive 1,863,279 Administrative expense Firefighters' Employees' 40,516 Additions: Retirement Pension Totals Contributions: (963,911) (17,166) (981,077) Employer $ 209,356 $ - $ 209,356 Plan member 29,224 - 29,224 Interfund transfers 597,276 75,000 672,276 Total contributions 835,856 75,000 910,856 Investment income: Net appreciation (depreciation) in fair value of investments (464,992) - (464,992) Interest and dividends 463,313 13,541 476,854 Total investment income (1,679) 13,541 11,862 Total additions 834,177 88,541 922,718 Deductions: Benefits 1,761,979 101,300 1,863,279 Administrative expense 36,109 4,407 40,516 Total deductions 1,798,088 105,707 1,903,795 Net increase (decrease) (963,911) (17,166) (981,077) Net assets held in trust for pension benefits: July 1, 2001 11,346,128 361,439 11,707,567 JUNE 30, 2002 $10,382,217 $344,273 $10,726,490 See auditor's report on page 13. -108- CITY OF PADUCAH, KENTUCKY OAK GROVE CEMETERY TRUST NONEXPENDABLE TRUST FUND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2002 Operating Revenues: Intergovernmental revenues Operating Expenses: Administrative costs Operating income Nonoperating Revenues (Expenses): Investment income Net income Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -109- Exhibit G3 $ 2,410 276 2,134 2,930 5,064 64,009 $69,073 CITY OF PADUCAH, KENTUCKY OAK GROVE CEMETERY TRUST NONO2ENDABLE TRUST FUND STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2002 Cash Flows from Operating Activities: Operating income Cash Flows from Investing Activities: Purchase of investment securities Proceeds from sales and maturities of investment securities Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2001 CASH AND CASH EQUIVALENTS, JUNE 30, 2002 See auditor's report on page 13. -110- Exhibit G-4 $ 2,134 (37,992) 20,457 3,333 (14,202) (12,068) 13,085 $ 1,017 CITY OF PADUCAH, KENTUCKY RINKLEFF ESTATE EXPENDABLE TRUST FUND COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2002 Revenues: Interest Expenditures: Administrative costs Excess of revenues over (under) expenditures Fund balance, July 1, 2001 FUND BALANCE, JUNE 30, 2002 See auditor's report on page 13. -111- Exhibit G5 $ 306 50 256 13,392 $13,648 CITY OF PADUCAH, KENTUCKY AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES YEAR ENDED JUNE 30, 2002 Property Tax Fund: Assets: Cash and cash equivalents Taxes receivable (net of allowances of uncollectibles) Due from other taxing agencies Total assets Liabilities: Due to other funds Due to other taxing agencies Due to taxpayers Total liabilities Payroll Fund: Assets: Cash and cash equivalents Liabilities: Payroll taxes and withholdings payable Totals - All Agency Funds: Assets: Cash and cash equivalents Taxes receivable (net of allowances for uncollectibles) Due from other taxing agencies Total assets Liabilities: Payroll taxes and withholdings payable Due to other funds Due to other taxing agencies Due to taxpayers Total liabilities See auditor's report on page 13. Balance July 1, 2001 $ (2,266) 204,373 2,265 $204,372 $101,991 102,381 $204,372 A ,7.7tat...... $ 9,270,174 Exhibit G6 Balance Deductions June 30, 2002 $ 9,267,908 $ - 9,254,642 9,270,174 188,841 106,792 106,943 2,114 $18,631,608 $18,645,025 $190,955 $ 4,423,988 $ 4,425,261 100,718 4,961,315 4,973,459 90,237 5,293 5,293 - $ 9,390,596 $ 9,404,013 $190,955 $279,735 $10,180,976 $10,205,329 $255,382 $279,735 $10,180,976 $10,205,329 $255,382 $277,469 $19,451,150 $19,473,237 $255,382 204,373 2,265 $484,107 $279,735 101,991 102,381 $484,107 -112- 9,254,642 9,270,174 188,841 106,792 106,943 2,114 $28,812,584 $28,850,354 $446,337 $10,180,976 $10,205,329 4,423,988 4,425,261 4,961,315 4,973,459 5,293 5,293 $19,571,572 $19,609,342 $255,382 100,718 90,237 $446,337 CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS GENERAL FIXED ASSETS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2002 GENERAL FIXED ASSETS This account group is used to account for the fixed assets of the City other than those accounted for in the Enterprise Funds. THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY COMPARATIVE SCHEDULES OF GENERAL FIXED ASSETS BY SOURCE JUNE 30, 2002 AND 2001 General Fixed Assets: Land Buildings and improvements Equipment Furnishings and fixtures Vehicles Total general fixed assets Investment in General Fixed Assets From: General Fund Special Revenue Funds Total investment in general fixed assets See auditor's report on page 13. -113- Exhibit H-1 2002 2001 $ 5,054,656 $ 5,054,656 13,026,970 13,026,970 5,371,310 5,279,401 249,328 250,828 4,220,538 4,382,397 $27,922,802 $27,994,252 $25,804,729 $25,889,944 2,118,073 2,104,308 $27,922,802 $27,994,252 CITY OF PADUCAH, KENTUCKY SCHEDULE OF GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY JUNE 30, 2002 Function and Activity General Fund: General government Finance Information systems Inspection Planning Police Fire Public works Recreation Cable authority Human rights Personnel Engineering services Total general fund Special Revenue Funds: Emergency communications Court awards Federal, state, and local grant funds Total special revenue funds TOTAL GENERAL FIXED ASSETS See auditor's report on page 13. -114- Land $1,402,417 213,644 27,956 119,000 3,000 2,804,512 51,000 4,621,529 20,000 413,127 433,127 $5,054,656 Buildings and Improvements $ 7,419,644 837,303 1,335,056 1,233,021 1,692,635 83,660 147,594 278,057 425,651 $13,026,970 Exhibit H-2 Equipment $1,574,390 106,193 59,384 82,231 121,461 606,683 435,355 663,105 233,623 76,651 11,459 24,946 186,346 4,181,827 861,866 142,914 184,703 1,189,483 $5,371,310 --h Furnishings and Fixtures Vehicles Total $ 81,305 $ 36,198 $10,513,954 1,394 - 107,587 - - 59,384 29,505 38,414 150,150 11,171 42,478 388,754 2,313 747,815 2,222,070 44,672 2,219,924 4,154,007 10,159 962,473 2,871,758 38,119 41,675 4,810,564 - - 76,651 - - 11,459 - - 24,946 7,047 85,392 413,445, 225,685 4,174,369 25,804,729 23,643 - 1,053,103 - 46,169 189,083 - - 875,887 23,643 46,169 2,118,073 $249,328 $4,220,538 $27,922,802 -115- CITY OF PADUCAH, KENTUCKY SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS BY FUNCTION AND ACTIVITY YEAR ENDED JUNE 30, 2002 Function and Activity General Fixed Assets General Fund: July 1, 2001 General government $10,513,954 Finance 107,587 Inspection 165,030 Information systems 22,304 Planning 362,653 Police 2,323,515 Fire 4,127,301 Public works 2,941,276 Parks 4,810,564 Cable authority 76,651 Human rights 11,459 Personnel 24,946 Engineering services 402,704 Total general fund 25,889,944 Special Revenue Funds: Emergency communications 1,053,103 Court awards 175,318 Federal and state grant funds 875,887 Total special revenue funds 2,104,308 TOTAL GENERAL FIXED ASSETS $27,994,252 See auditor's report on page 13. -116- Additions Deletions - 14,880 37,080 - 26,101 - 9,000 110,445 26,706 - 13,995 83,513 10,741 - 123,623 208,838 13,765 - 13,765 - $137,388 $208,838 Exhibit H-3 General Fixed Assets June 30, 2002 F $10,513,954 107,587 150,150 59,384 388,754 2,222,070 4,154,007 2,871,758 4,810,564 76,651 11,459 24,946 413,445 25,804,729 1,053,103 189,083 875,887 2,118,073 $27,922,802 CITY OF PADUCAH, KENTUCKY FINANCIAL STATEMENTS GENERAL LONG-TERM DEBT COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 GENERAL LONGTERM DEBT This account group is used to account for outstanding principal balances of the City's long-term debt and compensated absences. CITY OF PADUCAH, KENTUCKY STATEMENT OF CHANGES IN GENERAL LONG-TERM DEBT GENERAL LONG-TERM DEBT ACCOUNT GROUP YEAR ENDED JUNE 30, 2002 General fund accrued compensated absences General bond obligation Capital lease TOTAL GENERAL LONG-TERM DEBT ACCOUNT GROUP See auditor's report on page 13. Exhibit I-1 -117- Debt Balance New Debt Payment or Balance July 1, 2001 Incurred Reduction June 30, 2002 $ 1,290,795 $21,583 $ - $ 1,312,378 9,290,000 - 215,000 9,075,000 381,330 - 147,276 234,054 $10,962,125 $21,583 $362,276 $10,621,432 -117- CITY OF PADUCAH, KENTUCKY STATISTICAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 309 2002 i O O 00 M -+ 10 a\ N t— O i to d' N N � M h o0 vl � 0 %0 It 00 �O ON V 14t O %.O ON N N O vMi a� Iti QO1 01 0c1 M br4 00 O O O O 00 Q1 M •+ O ++ 01 O 00 cr N 't '' kn qtt Co 6� tr O .-. tf �-0 \ .-� �-+ 00 t-� kn tn C> tI:r Lg .-+ .--i .-- --� rr ►r .-i .--i as � O 00 �0 vl -- oo to O r - V — .-+ 00 Q1 N N M 00 � •L � O O � N � N � � --� a M M M 'Cf' kn V1 (l - 6s M .,-i V' to to 10 N N N N t— It CaN N en OM r- A W M M OMO N r- qt:Y I0 0 In M M 10 O M to O a t— 00 00 01 O O\ O O O �n q:t 00 ch W M to O o0 C w -- �n ON vl O\ C i 01 to 00 01 M M 01 M 00 et Q wl 1n IO In Ln to N T M ICT r6� ti p N N N N M M M M M 64 00 00 h N M r- 00 r It to 't • � .. O N �D O M N �O M n M w O 0) t w t- ONO t o M 00 �10 ON vl vl �O r-� O, oo C, O N N -- N N 69 i M 0�1 .- rl 0a1 -- Vl 0a1 -- 10 0O1 rr t*- 0*1 -- 00 0a1 .-+ cs 01 -- CD OO N CD N CD O N 09 NA 0011 ON 4 0°11 h 0c1 S 0m1 � 0m1 00 ON m 01 °i1 O O 0 � 0 -118- 0 z C� C y M O\ M v1 kn 1%0 �O 00 ON t� % O O M N M CN C*, O %o NO 1� cs y d Q 6 > 110 l- 00 %�D O N — .-. M Q\ > an N I— 00 l— 00 [� N — W11 In L. 10 kn 00 to r- 10 \D kn M cn r- 00 00 •-+ 00 ONC �O O M M �D yr GvOi 00 l- M O r- 00 M l� [z 6R U v� 000 r- r- w ON as to to O l— 00 O O ONO O 't "tM d' O� n CD C� `1" 10 to O Cl) M M 00 110 IAO "o NGf3 N M O M M � O CO) � tn N �10 N 00 -- %n %O ON to NT C y Lm �O 00 to N 110 t- 00 to ONO ON O1 N 00 M \D 00 I� r- Q\ 'AD IAO Fig qtrrOn --� OHO OHO C� C y M O\ M v1 kn 1%0 �O 00 ON t� % O O M N M CN C*, O %o NO 1� cs y d Q 6 > 110 l- 00 %�D O N — .-. M Q\ > an 00 O O l— N [� N — W11 N 1�0 CD u y v u 00 Nr- N 00 r- 10 \D kn M cn r- 00 00 .--� ItT .-+ 00 ONC �O O M M �D ,D 00 l- r- r- N U v� 000 r- r- r- I- W')� � OM CD oe C� .--� "o O M N t' -O\ O O �10 N 00 -- %n %O ON O NT C N O O qtrrOn --� OHO OHO V N N N F + N M M rf 'cf kn to %%D [- --� M OHO O �D M 4j ll� N m W) O O\ v1 O N O O1 c �D cc N M I'D kn -- 00 [- W) M O Ey t^ O N I^ l n lD [ O �t �f vi vi 't tt tri V1 M O t- to %C It � O j � t% �00^- O N n ♦�+ IC 00 N N 0 N � � N M %D - 0 0 00 (0 O -- -- N M M v N N N N N N N N r- 00 ON O -- N ON ON CN CN ON ON O O O ,y Oji (7% N N N GS N M AS [� 00 O\ O --� 0� (ON ON ON CN O O ON O1 Q\ ON O1, O O •-- r . --, -- .-- -- .-. .-. N N -119- 0 z CO C, O ON O 00 kn M GM �. O O O 1.O d r` O v) M O v1 M cg N M l- �0 v co u CD U CIOE-� 000 000^ n00 ON ON o N e � Gn i "O kf) 00 O vl O^ � ON O to O 00o kn 1.0 vii Wl VI 04 F CP — M v a 04 69 r+ (� M QM' N C14 qtt M Itt Cn N U O CSC w <T 1O 00 N v) 00 M O\ 00 O a C W .--� .-r •-" M M O C� •--� .-� O N O f, y 04 � O � r- N C) M � � O N M O M oC0 M cq C14 C14 foq C to C\ O\ M to O O to •w r- (ON C N C O0o okn oo G 000 vi 0�1 M 00 kn v1 L cl N N M N N N W 'zJ a v1 t- � Co 00 t- ON v, 00 to � Q O L 000 r- -�+ � M 00 N H N O tn 99 6 pp,,, a� G oho C1 C� ON 00 ON ONO M vi C� ai a 64 N PCpii C � N M O � N O r- CS 00 O C O C v) O kn \O 110 .--� [ - 00 00 00 O 6 C4 O oo N \�e N cp r - N M 00 N [- 00 t- 00 y U �"� o0 0-0 V A O O C, C k C i O en 1,: et � 00 O CN r- vl �D nM O ON M to H O M 000 o� W) C14 O0 00 vi vi tn qt et ICT d' ett vi qcr tn 110 r- 00 ON QL a, CS ON C, C, a, rn O O o .. C, ON as CN O, ON N N N v N M d v1 L l� 00 Ch O — Wcl� ON - - ON - N co -120- TABLE 4 CITY OF PADUCAH, KENTUCKY SECURED TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (1) Includes current year real and personal property tax, franchise, auto and bank shares. -121- (1) (1) Percent of Total Total Levy Fiscal Year Levy Collections Collected 1992-1993 $4,463,877 $4,446,386 99.6% 1993-1994 4,726,013 4,713,807 99.7% 1994-1995 4,998,288 4,981,828 99.6% 1995-1996 5,040,252 5,022,419 99.6% 1996-1997 4,361,298 4,350,475 97.8% 1997-1998 4,417,910 4,373,272 99.0% 1998-1999 4,614,749 4,602,800 99.7% 1999-2000 4,428,970 4,384,681 99.0% 2000-2001 4,549,413 4,406,600 96.9% 2001-2002 4,679,795 4,532,885 96.9% (1) Includes current year real and personal property tax, franchise, auto and bank shares. -121- -122- O U O U a� A a> U O C NO 01 M M y C1 O O O 10 V1 V'^ M 1t 9F iF iF it iF 69 y00 C N r- O1 'ct C1 q -T O M M O^ C� CL C+ .-. O 00 o0 qCT 00 00 00 01 N 00 0000^ � 00 � N M � v tn h � W v W) v to vii h to C U PC v Oa o o 0 0 0 0 0 0 vii i 41 O cc cr u 1 kn O l- 00 O� ON M N F M 4h h Vl h V1 as t O1 O1 1G O` w M r Cl) Ri O N O t` M c1 v oo �n o0 00 cq 00 M M M O1 O N N M V V %C� lc� 69 00 t� O �-D M 00Cl% O _ n M Ch O1 10 V'1 M N M 1D en 00 CD N M b C t 0 H O O00 N N N M en h IC 69 O n wl � Ow oo L M � IT M cc M qtr tn 00 CN 10 O %•Nr M 00 *M, t1 00 l a � v 00 % M C vwi 000 0000 M et M r- M OItrw N LqtT en w a v1 tn v1 wl IT C1 %o %0 V- -O C) 0�o N N as tn � O 000 -- 10 V N C 00� 00 00 O1 C1 r- M 00 C1 O O — 00 Q\ r- N O O 10 N v L CL O N Clw W [ O o0 aw L n 00 O as a1 C1 1C a s M cq M as M M M M M eh Qq h .• Q\ r- 00 M 00 O o0 C1 N r- l� N ^• [ - N 1.0 N v O � v1 %O O rz v r- q* o 0 h O M 0 O 000^ C1 N N W MN � as N h C � 000 O � 0 W) N �o tl- 00 00 C1 O1 O bs r: ~ 00 O OM1 OOtn , m0O1 ON ON ONO O o, 01 0, ON a1 01 a\ 0 0 0 .- - -- N N N 00 aN CD h 01 ON 01 01 O1 C1 01 O1 O O (z N N -122- O U O U a� A a> U O C -123- I 000 o0 00 'C N O O O O O O O L E 0 U d 00 N w eq eq O O � O O U a 'fl L CQ O 44 eq ell C14 C14 t4 ON W I O O O O O O O O O O y '+L+ y In h In \o In In N a ca 0 o 15 3 L y O O O F d p„ e 0 .y W O O O O a .. e :• o W i oI 0 0 0 0 I i N _ R ^" h 0 0 0 0 1 1 f C 0 0 0 0 W c o V a, ON as a\ ON as C\ cs ON C O to et qk qd: M M M M M M M a � o d a e V N N 00 00 0 0 o C a In wl M M N N O O O O Wwl d: M M M M M M N i' O M h [� N 0) m m O O O N h N R trf �O r- 00 ON O an 2.� 5. O O lz N N -123- I L. e� ON ON O O O Cli � Cl v r`ni r , .-+ .-- -- N N N zA� 01 O � � N M � V1 �O l� 00 V CN O� ON ON 01 O1 O\ O O O O1 01 O1 O1 OV O� O O •-- •-- .-. .-. -- - --� rA W p N N 00 C14 Cp N '~ Qa d aZA�� N 00 to to r M Cn N 00 N Opp M N 6� CM O Z c A 000 M 000 r. to O 00 CYi kn vi - • O; 00 ON tn p A O N O v� to d a; ON 00 en 00 ON ON t� O M M 01 �O Vl M N M �O O y y y M M O ON M 00 00 -- N m 'qt M m C14 r r- N \C-- Vpi p O1 M M "C [- M N [- M N d O — NN NO M � h v) A � IC n r- N N N N N N �n N v-. N O M O M V r- r - d+ O a L. e� ON ON O O O O � r. r , .-+ .-- -- N N N 01 O � � N M � V1 �O l� 00 V CN O� ON ON 01 O1 O\ O O O O1 01 O1 O1 O1 O� O O •-- •-- .-. .-. -- - --� - , N N -124- TABLE 8 CITY OF PADUCAH, KENTUCKY RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL EXPENDITURES LAST TEN FISCAL YEARS (1) Includes the General Fund and Municipal Aid Fund * Includes in -substance defeasance of Kentucky League of Cities - Pooled Leasing debt. -125- Ratio of (1) Debt Service Total To Total Total General Governmental Debt Government Fund Type Fiscal Year Principal Interest Service Expenditures Expenditures 1992-1993 $ 292,759 $327,436 $ 620,195 $15,064,088 4.1% 1993-1994 444,344 379,956 824,300 15,928,276 5.2% 1994-1995 913,564 405,000 1,318,564 16,744,678 7.9% 1995-1996 438,141 355,361 793,502 17,737,044 4.5% 1996-1997 4,119,275 * 431,669 4,550,944 19,823,351 22.9% 1997-1998 150,709 46,829 197,538 18,787,240 1.1% 1998-1999 170,615 35,891 206,506 21,306,659 1.0% 1999-2000 134,295 30,536 164,831 19,817,326 0.8% 2000-2001 140,636 25,752 166,388 20,677,530 0.8% 2001-2002 362,275 413,364 775,639 22,904,317 3.4% (1) Includes the General Fund and Municipal Aid Fund * Includes in -substance defeasance of Kentucky League of Cities - Pooled Leasing debt. -125- TABLE 9 CITY OF PADUCAH, KENTUCKY COMPUTATION OF LEGAL DEBT MARGIN YEAR ENDED JUNE 30, 2002 Net assessed value Add exemption Total assessed value Debt limit - 10% of total assessed value (1) Debt outstanding: General oligations bonds outstanding $9,075,000 Less debt not subject to limit - Gross bonded debt 9,075,000 Less amount available in debt service funds 244,724 Net bonded indebtedness subject to limit Legal Debt Margin (1) Section 158 of the Commonwealth of Kentucky states: $1,562,420,650 60,449,948 $1,622,870,598 $ 162,287,060 8,830,276 $ 153,456,784 "Cities shall not be authorized or permitted to incur indebtedness to an amount, including existing indebtedness, in the aggregate exceeding the following named maximum percentages on the value of the taxable property therein, to be estimated by the assessment previous to the incurring of the indebtedness: Cities of the first and second classes, and of the third class having a population exceeding fifteen hundred, ten per centum." -126- p y N b N h h N ON w+ C M O N �_ C y y 00 O 01 O 10 M C� cf n It 'et 00 I- Y1 v d° * * 0 00 C ❑ s O� O 00 01 to 00 00 q 00 O V7 c 00 Y1 00 O h C' \O 01 M 000 CN 000 00 M r- V1 Cl M r- N O qq- 00 00 t� C V ; 00OM1^ 0�0 M y p 1D O O N � OMO � O00O 00 64 VJ y U y � C O z �t N 01 N N N 00 N O M 00 M O M '-+ N r- - -+ CN N n N 00 V1 V CN W — ON to t- jV M 000 M dam' OMO to tn 0 o O h N C 0 O N ao o0 00CD V > et M O N M O m M06 O L M O O �e L M to M M N M N !}' N C ° U ° U C1 CN 01 C1 01 01 O1 O O O N Cd CI r7 N N N N N 00 N OM O N •�- h Q1 M [-. l- 00 01 N a, N O a\ C1 M 01 O N m r- W M b N N 00 00 a1 M 'cf n M O M V1 wl 10 00 V1 1D N F 10 v o� vi o 00 �o v � CN � to � o0 0`Oo 0�1 0 to 0 0 6s h C S M 00 M N r-01 Mm 10 ^� tn M M C1 C1 �h Q1 a 000 O 000 b N M 001 ca 69 try > p n N b N h h N ON w+ C1 M O N C V- 00 10 10 cf 01 M 0 00 C C O� M 01 O OS r— 00 M 00 00 Y1 00 00OM1^ � OMO � O00O E � 0M0 -- r t Cl M 001^ N n N 00 V1 V CN W — t- jV M en M M to tn M to 0o O\ O .-+ N > C1 CN 01 C1 01 01 O1 O O O N Cd N M v1 b n 00 01 O •�- h Q1 01 C1 01 01 01 C1 01 O O C1 D1 01 C1C1 01 01 C1 W .- N N p as an o CD to 0% 1�0 V•-- N M vi 00 ,C C C w C14 Co C) in 0 tn O 3 go N r O N h r- N r- ik dF iF w (V� N N N N N ... `O w c qtT CN ON O [- a% O a N r- O N N -- 1F iF iF N 6i ' M tn M bf3 Li � O O O O O O O O CA o 0 0 0 0 0 0 ca kr O O tocq �L .tA- N N a 6 4)ON v1 -- 00 M r- O r- C, �10 M to H � C3 l� 00 V� M O� in In �O C) O l� 00 iF 9F iF �+ M kn 00 C- kn to N U ►� z A N � E O V N H 0000 N 00 t 00 W) r -O 02 t � to 1.0 O Qbo U O N O o0 dF dF iF N N 4�i O C/1 Gock O N C 00 1 r 00 N �O 00 t� v1 N Q\ D\ M ►. y C O C io C O O 10 N %Cit iF * bD y V `�,, i0• N r- 000 �j N N N M M M M •C � O O' O w 64 LL V O O C v rA 7 O C g � C 4) o •� L O N F, � >4 42 w � M � v1 �O CN t� ON 00 CN O� C1 O •.• O O rnrA a1 a\ a1 Q1 a\ as N N N O SCS O � C7 H H t3 C N M 4 vA �D v� o0 01 N N N -128- TABLE 12 CITY OF PADUCAH, KENTUCKY DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Sources: (1) Bureau of the Census Count - 1990 and 2000. (2) Bureau of the Census Count - 1990 and 2000. (3) Board of Education; represents elementary and secondary public schools. (4) Kentucky Cabinet for Human Resources, Department for Employment Services. -129- . N (1) (2) (2) (3) (4) Per Capita Median School Unemployment Fiscal Year Population Income Age Enrollment Rate 1992-1993 27,256 $11,918 36.6 3,365 5.9% 1993-1994 27,256 11,918 36.6 3,416 5.7% 1994-1995 27,256 11,918 36.6 3,389 3.9% 1995-1996 27,256 11,918 36.6 3,320 4.4% 1996-1997 27,256 11,918 36.6 3,312 5.5% 1997-1998 27,256 11,918 36.6 3,244 4.3% 1998-1999 27,256 11,918 36.6 3,195 3.2% 1999-2000 27,256 11,918 36.6 3,289 3.8% 2000-2001 26,307 11,918 39.9 3,037 4.2% 2001-2002 26,307 18,417 39.9 2,909 5.2% Sources: (1) Bureau of the Census Count - 1990 and 2000. (2) Bureau of the Census Count - 1990 and 2000. (3) Board of Education; represents elementary and secondary public schools. (4) Kentucky Cabinet for Human Resources, Department for Employment Services. -129- . N TABLE 13 CITY OF PADUCAH, KENTUCKY MISCELLANEOUS STATISTICAL DATA JUNE 30, 2002 Miscellaneous: Date of incorporation 1830 Form of government City Manager, Mayor Middle school and Commissioners Area - square miles 19.19 Miles of streets/paved 209 Miles of sidewalks 45 Population 26,307 Registered voters 15,117 Votes cast last general election 8,069 Number of hospitals 2 Schools: Number of public schools: 20 High school 1 Middle school 1 Elementary 4 Head Start 1 Alternative learning center 1 Adult education 1 Students 2909 Teachers 224 Administrative personnel 32 Support personnel 252 Parks and Recreation: Number of parks 20 Acres of parks 320 Public golf courses 2 Public swimming pools 3 Public tennis courts 6 -130- TABLE 13 CITY OF PADUCAH, KENTUCKY MISCELLANEOUS STATISTICAL DATA JUNE 30, 2002 Police and Fire Protection: Number of employees: Policemen Firefighters Number of fire stations Utilities: Water utility: Number of users Annual consumption Distribution lines Employees Sewer utility: Plant capacity main plant Miles of collection system: Sanitary sewers Combination sewers Storm sewers Employees Electric utility: Number of street lights Number of city maintained traffic light intersections Employees -131- 75 73 5 22,012 2,620,000,000 Gallons 473 Miles 51 9,000,000 Gallons/Day 180 Miles 56 Miles 38 Miles 36 4,573 10 66 TABLE 14 CITY OF PADUCAH, KENTUCKY PRINCIPAL TAXPAYERS JANUARY 1, 2002 (1) Assessed Taxpayer Type of Business Valuation Kentucky Oaks Mall Mall $ 45,570,900 Wal-Mart Retailer 36,901,571 AmeriSource Drug wholesaler 19,987,875 Alliant Foodservice, Inc. Food wholesaler 17,725,575 Drury Inns, Inc. Motels 13,687,418 NES Equipment Service Corp. Healthcare 13,453,438 Paducah Medical Investors Lowe's Computer Services, Inc. H. B. Fuller TOTAL Healthcare Retailer Bank data processor Adhesive manufacturing 13,440,090 13,333,468 12,728,139 10,771,209 $197,599,683 (1) Source - Property Valuation Administration; Assessed value as of January 1, 2002. -132- Percentage of Total Assessed Valuation 3.11% 2.52% 1.37% 1.21% 0.94% 0.92% 0.92% 0.91% 0.87% 0.74% 13.51% TABLE 15 CITY OF PADUCAH, KENTUCKY COMPUTATION OF DIRECT AND OVERLAPPING DEBT JUNE 30, 2002 (1) Applicable percentage is determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. -133- (1) Amount Percentage Available Applicable Bonds/Loans Debt Service Net Debt to City Outstanding Funds Outstanding of Paducah City of Paducah $ 9,075,000 $244,724 $ 8,830,276 100.0% Paducah Independent School District 8,580,000 - 8,580,000 100.0% McCracken County 6,530,000 - 6,530,000 48.1% McCracken County Board of Education 18,936,884 - 18,936,884 23.9% Overlapping Debt 34,046,884 - 341046,884 TOTALS $43,121,884 $244,724 $42,877,160 (1) Applicable percentage is determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. -133- TABLE 16 CITY OF PADUCAH, KENTUCKY POLICE AND FIREFIGHTERS' RETIREMENT FUND REVENUE BY SOURCE LAST TEN FISCAL YEARS (1) Includes interest and dividend income and net gain (loss) on sale of investments, but does not include net appreciation (depreciation) in fair value of investments. -134- (1) Employee Employer Investment Fiscal Year Contributions Contributions Income Other Total 1992-1993 $37,910 $173,909 $ 908,887 $10,376 $1,131,082 1993-1994 36,797 356,200 852,563 396 1,245,956 1994-1995 34,737 323,844 784,629 2,702 1,145,912 1995-1996 33,253 340,773 884,085 4,052 1,262,163 1996-1997 33,888 744,484 858,541 1,203 1,638,116 1997-1998 36,110 660,651 989,175 8,967 1,694,903, 1998-1999 311371 593,776 716,366 2,998 1,344,511 1999-2000 27,640 649,274 1,224,591 2,000 1,903,505 2000-2001 28,482 865,026 1,033,814 - 1,927,322 2001-2002 29,224 806,632 487,024 - 1,322,880 (1) Includes interest and dividend income and net gain (loss) on sale of investments, but does not include net appreciation (depreciation) in fair value of investments. -134- -135- n TABLE 17 CITY OF PADUCAH, KENTUCKY POLICE AND FIREFIGHTER'S RETIREMENT FUND EXPENSES BY TYPE LAST TEN FISCAL YEARS Benefit Investment Fiscal Year Refunds Payments Services Other Total 1992-1993 $19,117 $1,342,978 $ 7,224 $25,164 $1,394,483 1993-1994 - 1,394,169 6,504 28,331 1,429,004 1994-1995 - 1,492,528 6,302 5,842 1,504,672 1995-1996 - 1,535,885 7,119 12,433 1,555,437 1996-1997 - 1,585,549 7,008 2,102 1,594,659 1997-1998 - 1,613,710 15,777 7,649 1,637,136 1998-1999 28,684 1,695,198 11,756 10,831 1,746,469 1999-2000 - 1,719,043 10,993 9,868 1,739,904 2000-2001 - 1,742,179 8,008 10,437 1,760,624 2001-2002 - 1,761,979 9,107 27,002 1,798,088 -135- n # 3m � 7 t- 7 q d s -ca 2 o § � § � E 0 \ 3 S 3 � 7 7 601� u 2 k k k k k 9 — � k � k k k k o CN 0 0 0 0 k 9 E 9 9 9 C Q cq tn C14 C14 C14 C14 604 en � k k e . k k Cl 7 / / 7 / � w P U t # � & a ° ° @ � Cd d s -ca 2 o § � § � E 0 -136- CITY OF PADUCAH, KENTUCKY SINGLE AUDIT SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 303, 2002 CITY OF PADUCAH, KENTUCKY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2002 Federal Pass -Through Federal Grantor/Pass-Through Grantor/ CFDA Grantor Program Title: Number Number Expenditures Department of Housing and Urban Development: Contract A -2877-E Section 8 Housing Choice Vouchers 14.871 Contract A -2877-V $1,544,522 Passed through Kentucky Department of Local Government: Community Development Block B -97 -DC -21-0001(047) Grants/State's Program 14.228 99-101 98,994 Passed -through Kentucky Housing Corporation: M -98 -SG -2101-05-00 M -99 -SG -2101-05-00 HOME Investment Partnerships M -01 -SG -2101-36-00 Program 14.239 M -01 -SG -2101-05-00 401,684 Total Department of Housing and Urban Development 2,045,200 Department of Justice: 1999 -LB -VX -3172 Local Law Enforcement Block 2000 -LB -VX -3172 Grants Program 16.592 2001 -LB -BX -1375 207,961 Public Safety and Community Policing Grant 16.726 98-UM-WX-2055 49,406 Byrne Formula Grant 16.579 2000 -DD -VX -0047 4,466 Total Department of Justice 261,833 Department of Agriculture: Passed -through Kentucky Department of Education: Summer Food Service Program for Children 10.559 N/A 29,853 U.S. Department of Transportation: Passed -through Kentucky Transportation Cabinet: Transportation Enhancement Project - Locomotive Project 20.205 C-99039093 13,493 Transportation Enhancement Project - Streetscape 20.205 N/A 321,222 Total Department of Transportation 334,715 TOTAL EXPENDITURES OF FEDERAL AWARDS $2,671,601 See accompanying notes to schedule of expenditures of federal awards. -137- CITY OF PADUCAH, KENTUCKY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2002 Note 1- Basis of Presentation: The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Paducah and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. Note 2 — Subreciyients: The City of Paducah did not provide federal awards to subrecipients during the year. -138- WILLIAMS, WILLIAMS & LENTz, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON - P.O. BOX 2500 PADUCAH, KENTUCKY 42002-2500 J. RICHARD WALKER ROBERT R. ROBERTSON JERRY G. SEVERNS C. SUZETTE CRONCH ANNETTE T. RYAN MICHAEL F. KARNES MARK A. THOMAS - Report on Compliance and on Internal Control ROGER G. HARRIS J. DAVID BAILEY, III Over Financial Reporting Based on an Audit G. LEON WILLIAMS of Financial Statements Performed in Accordance with H. WILLIAM LENTZ Government Auditing Standards Honorable William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky TELEPHONE AREA CODE 270 {13.3643 We have audited the general purpose financial statements of the City of Paducah, Kentucky, as of and for the year ended June 30, 2002, and have issued our report thereon dated September 12, 2002. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The financial statements of Paducah Water Works, Forest Hills Village, Inc., Paducah Power System, and Paducah Junior College, Incorporated were not audited in accordance with Government Auditing Standards. Compliance As part of obtaining reasonable assurance about whether the City of Paducah, Kentucky's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Paducah, Kentucky's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of the City of Paducah, Kentucky, in a separate letter dated September 12, 2002. This report is intended for the information and use of the Board of Commissioners of the City of Paducah, Kentucky, management, others within the organization, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. September 12, 2002 -139- WILLIAMS, WILLIAMS & LENTZ, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON - P.O. BOX 2500 PADucm, KENTUCKY 42002-2500 J. RICHARD WALKER ROBERT R. ROBERTSON JERRY G. SEVER14S C. SUZETTE CRONCH ANNETTE T. RYAN MICHAEL F. KARNES MARX A. THOMAS Report on Compliance with Requirements Applicable ROGER G. HARRIS J. DAVID BAILEY, III to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 G. LEON WILLIAMS H. WILLIAM LENTZ Honorable William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Compliance TELEPHONE AREA CODE 270 "3-3647 We have audited the compliance of the City of Paducah, Kentucky, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2002. The City of Paducah, Kentucky's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the management of the City of Paducah, Kentucky. Our responsibility is to express an opinion on the City of Paducah, Kentucky's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Paducah Kentucky's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Paducah, Kentucky's compliance with those requirements. In our opinion, the City of Paducah, Kentucky complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of the City of Paducah, Kentucky, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Paducah, Kentucky's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A- 133. -140- Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended for the information and use of the Board of Commissioners of the City of Paducah, Kentucky, management, others within the organization, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. September 12, 2002 -141- CITY OF PADUCAH, KENTUCKY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002 A. Summary of Audit Results: 1. The auditor's report expresses an unqualified opinion on the general purpose financial statements of the City of Paducah, Kentucky. 2. No reportable conditions were disclosed during the audit of the general purpose financial statements of the City of Paducah, Kentucky. 3. No instances of noncompliance material to the general purpose financial statements of the City of Paducah, Kentucky were disclosed during the audit. 4. No reportable conditions were disclosed during the audit of the major federal award programs. 5. The auditor's report on compliance for the major federal award programs for the City of Paducah, Kentucky expresses an unqualified opinion. 6. There are no audit findings relative to the major federal awards program to be reported. 7. The programs tested as major programs included: Name CFDA # Section 8 Housing Choice Vouchers 14.871 HOME Investment Partnerships Program 14.239 Transportation Enhancement Project - Locomotive Project and Streetscape 20.205 8. The threshold for distinguishing Types A and B programs was $300,000. 9. The City of Paducah, Kentucky was determined to be a low-risk auditee. B. Findings - General Purpose Financial Statements Audit: None C. FindinEs and Questioned Costs - Maior Federal Award Programs: None -142-